Global Monitoring Report 2011

Improving the Odds

of Achieving the MDGs
 Global Monitoring Report 2011

Improving the Odds of

Achieving the MDGs
 Global Monitoring Report 2011

Improving the Odds of

Achieving the MDGs

Heterogeneity, Gaps, and Challenges

© 2011 The International Bank for Reconstruction and Development / The World Bank

1818 H Street NW
Washington DC 20433
Telephone: 202-473-1000
Internet: www.worldbank.org
All rights reserved

1 2 3 4 14 13 12 11

This volume is a product of the staffs of The World Bank and The International Monetary Fund. The find-
ings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the
Board of Executive Directors of The World Bank, the Board of Executive Directors of The International
Monetary Fund, or the governments they represent.
The World Bank and The International Monetary Fund do not guarantee the accuracy of the data
included in this work. The boundaries, colors, denominations, and other information shown on any map
in this work do not imply any judgement on the part of The World Bank or The International Monetary
Fund concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

Rights and Permissions

The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work
without permission may be a violation of applicable law. The International Bank for Reconstruction and
Development / The World Bank encourages dissemination of its work and will normally grant permission
to reproduce portions of the work promptly.
For permission to photocopy or reprint any part of this work, please send a request with complete
information to the Copyright Clearance Center Inc., 222 Rosewood Drive, Danvers, MA 01923, USA;
telephone: 978-750-8400; fax: 978-750-4470; Internet: www.copyright.com.
All other queries on rights and licenses, including subsidiary rights, should be addressed to the Office
of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422;
e-mail: pubrights@worldbank.org.

ISBN: 978-0-8213-8700-9
eISBN: 978-0-8213-8701-6
DOI: 10.1596/978-0-8213-8700-9

The painting on the cover, “Faces of Diversity,” is by Tola Wewe; the painting is from his ‘Beauty is
Everywhere’ series and is part of a private collection.

Tola Wewe is a member of the African Artists’ Foundation (AAF), which is a nonprofit organization
dedicated to the promotion of African art and artists, and the promotion of relevant social issues through
artistic endeavors. AAF plays a significant role in art communities in Africa through its art exhibitions,
competitions, art classes, and workshops with the aim of unearthing and developing talent, creating
societal awareness, and providing a platform to express creativity. Visit www.africanartists.org for more
information on AAF.

Cover design by Debra Naylor of Naylor Design

Interior photographs: All photographs are from the National Geographic Society Image Collection. Lynn
Johnson (page 10); James P. Blair (page 42); Lynn Johnson (page 70); W. E. Garrett (page 102); Randy
Olson (page 124).
 Contents

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi

Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii

Acronyms and Abbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv

Goals and Targets from the Millennium Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvi

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1 The Diversity of MDG Progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

2 Economic Growth in Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

3 Linking Spending and Outcomes: Some Lessons from Impact Evaluations in
Education and Health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

4 Assisting the Indigenous and Socially Excluded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

5 Progress in the International Development and Trading Framework. . . . . . . . . . . . . . 125

Appendix 1: Technical Issues in Estimating Progress on the MDGs . . . . . . . . . . . . . . . . . 159

Appendix 2: Policies to Reduce Biodiversity Loss and Enhance Human Development . . . 175

GLOBAL MONITORING REPORT 2011 v

vi CONTENTS GLOBAL MONITORING REPORT 2011

BOXES
1.1 Poverty data and projections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1.2 Gaps and issues in measuring development outcomes beyond 2015 . . . . . . . . . . . . 18
1.3 Improving children’s health through sustainable access to food, water,
and energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
1.4 The impact of violence on the MDGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
1.5 Reducing inequality and poverty in Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.1 The global food price surge in 2010—causes and prospects . . . . . . . . . . . . . . . . . . 46
2.2 Low-income-country exports during the exit from the crisis: early evidence . . . . . . 50
2.3 Emerging market capital inflows: experience and challenges . . . . . . . . . . . . . . . . . . 58
2.4 Fragile states—experience and implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
3.1 Some impact evaluations have forced a rethinking of our assumptions about
HIV/AIDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
3.2 Spillovers and unintended effects can be important . . . . . . . . . . . . . . . . . . . . . . . . . 77
3.3 The DIME initiative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
4.1 Who are indigenous peoples? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
4.2 The Roma of Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
4.3 Vulnerable groups deserve more attention in MDG country reports . . . . . . . . . . . 112
4.4 Bilingual education in Guatemala . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
4.5 Examples of successful targeted programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
5.1 Aid recipients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
5.2 The donor community is enhancing Africa’s trade facilitation . . . . . . . . . . . . . . . . 140
5.3 Special reconstruction allocation for Haiti . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
5.4 World Development Report 2011: Conflict, Security, and Development . . . . . . . . 147
5.5 Open data, open knowledge, and open solutions . . . . . . . . . . . . . . . . . . . . . . . . . 152
5.6 Climate change, natural disasters, and the World Bank Group . . . . . . . . . . . . . . . 153

FIGURES
1 The distance to global MDGs ranges widely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 More than two-thirds of developing countries are on track or close to being
on track . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1 Current global distance to the MDGs is wide ranging . . . . . . . . . . . . . . . . . . . . . . . 12
1.2 Fewer low-income countries are on track to achieve the MDGs . . . . . . . . . . . . . . . 12
1.3 Countries on target to achieve the MDGs, by region . . . . . . . . . . . . . . . . . . . . . . . . 15
1.4 More than two-thirds of developing countries are on track or close to being
on track . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1.5 MDG performance is stronger in countries with good initial conditions . . . . . . . . . 26
1.6 Subsequent economic growth and policy seem to matter more . . . . . . . . . . . . . . . . 27
1.7 MDG performance lags in IDA and fragile countries . . . . . . . . . . . . . . . . . . . . . . . 29
GLOBAL MONITORING REPORT 2011 CONTENTS vii

1.8 MDG performance is better in countries with greater export sophistication and
shipping connectivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
1.9 The odds of getting on target rise substantially with faster growth and
better policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
1.10 Growth and policy reforms will put many countries on track . . . . . . . . . . . . . . . . . 36
2.1 Low-income economies’ per capita growth remained positive in 2009,
in contrast to elsewhere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.2 Economic recovery has taken many commodity prices sharply higher . . . . . . . . . . . 45
2.3 Bond spreads and international bond issuance are virtually back to precrisis
levels in emerging and developing countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.4 Share prices, too, have bounced back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
2.5 Emerging market bank financing continues to recover . . . . . . . . . . . . . . . . . . . . . . 47
2.6 Nonperforming loans in emerging and developing countries, 2003–10 . . . . . . . . . . 48
2.7 Global current account imbalances, 2000–11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
2.8 Annual changes in terms of trade, by quintile group . . . . . . . . . . . . . . . . . . . . . . . . 49
2.9 Reserve levels broadly kept pace with the rebound in trade. . . . . . . . . . . . . . . . . . . 49
2.10 Low-income countries’ precrisis macroeconomic policy buffers were stronger
than in earlier years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.11 Macroeconomic policy responses to the crisis vary . . . . . . . . . . . . . . . . . . . . . . . . . 53
2.12 Monetary policy loosening . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.13 Average year-on-year growth in money and the money gap in emerging
market economies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
2.14 Fiscal deficit, 2008–11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
2.15 Low-income countries: fiscal balances and economic crises . . . . . . . . . . . . . . . . . . . 55
2.16 Real primary expenditure in low-income countries has increased in favor
of public investment and social sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
2.17 Macroeconomic policy quality in low-income countries remained little changed. . . 56
2.18 The overall debt outlook in low-income countries seems favorable as fiscal
buffers are being rebuilt along with the recovery. . . . . . . . . . . . . . . . . . . . . . . . . . . 63
2.19 Low-income countries projected to cut real spending tend to have high deficits
and debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
2.20 The current account balance is projected to improve gradually in low-income
countries as exports rebound . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
2.21 Reserve cushions would not improve much among low-income countries with
relatively low reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
3.1 Government and donor spending on health and education is unprecedented. . . . . . 72
3.2 The relationship between expenditure and learning outcomes is weak . . . . . . . . . . 73
3.3 There are wide differences in the share of public health spending going to the
rich and the poor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
3.4 Links between public expenditure and human development outcomes . . . . . . . . . . 74
4.1 Progress is mixed in reducing the poverty of indigenous groups . . . . . . . . . . . . . . 106
4.2 Test results show how stigma can be internalized . . . . . . . . . . . . . . . . . . . . . . . . . 108
viii CONTENTS GLOBAL MONITORING REPORT 2011

4.3 Heterogeneity has a negative effect on test scores . . . . . . . . . . . . . . . . . . . . . . . . . 108

4.4 Both poor and rich countries show gaps in life expectancy . . . . . . . . . . . . . . . . . . 110
5.1 Impact of banking crises on net disbursed aid provided by crisis-affected donors,
1977–2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
5.2 Exports have yet to recover their precrisis trend . . . . . . . . . . . . . . . . . . . . . . . . . . 132
5.3 Merchandise export volume . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
5.4 Trade-restrictive measures have fallen since 2008 . . . . . . . . . . . . . . . . . . . . . . . . . 134
5.5 Newly initiated trade remedy investigations have peaked . . . . . . . . . . . . . . . . . . . 134
5.6 Trade-restrictive and trade-liberalizing measures, November 2009–
October 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
5.7 Local-to-global connectivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142
5.8 Regional trends in aid for trade, 2002–09 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
A1.1 Odds of achieving the MDGs improve with growth and better policy . . . . . . . . . . 171

MAPS
1.1 The world is still on track to meet the poverty reduction target . . . . . . . . . . . . . . . 25
1.2 Sub-Saharan Africa and Southern Asia are home to the vast majority of
children out of school . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.1 GDP: Economic growth in 2009 and 2010 has been uneven . . . . . . . . . . . . . . . . . . 60
2.2 Fiscal balance: Countries are diverging in their responses to fiscal challenges . . . . . 61
3.1 The maternal mortality rate is declining only slowly, even though the vast
majority of deaths are avoidable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
3.2 Each year of a girl’s education reduces, by as much as 10 percent, the risk of
her children dying before age five . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
4.1 Almost nine million children still die each year before they reach their fifth
birthday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
4.2 For girls in some African countries, secondary education remains elusive . . . . . . 115
5.1 Across the world, 884 million people lack access to safe water—around 80
percent of them in rural areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
5.2 With half the people in developing regions without sanitation, the 2015 target
appears to be out of reach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
A2.1 Average change in species populations, relative to the intact situation
(mean species abundance), 2000 and 2050. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176

TABLES
1 Lagging countries are close to getting on target. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2 Growth and CPIA scores are higher in countries on track or close to being
on track . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3 Global output, 2007–14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.1 Several low-income countries are achieving the MDGs . . . . . . . . . . . . . . . . . . . . . . 16
1.2 Lagging countries are close to getting on target. . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
GLOBAL MONITORING REPORT 2011 CONTENTS ix

1.3 Many countries are within 10–20 percent of being on target. . . . . . . . . . . . . . . . . . 20

1.4 Lagging countries within 10 percent of being on target to achieve the MDGs . . . . 20
1.5 Growth and CPIA scores are higher in countries on track or close to being
on track . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
1.6 A one-standard-deviation increase in growth is definitely achievable . . . . . . . . . . . 36
2.1 Global output, 2007–14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.2 Net financial flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2.3 Inflows of international remittances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
4.1 Poverty rates, latest year available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
4.2 Years of schooling, latest year available . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
4.3 Status of indigenous groups relative to the MDGs, selected African countries . . . . 113
A1.1 Data availability by MDG, income, and geographic region, fiscal 2011 . . . . . . . . 160
A1.2 MDG performance: share of countries close to the target in the total number
of countries off target, by geographic region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
A1.3 MDG performance: share of countries close to the target in the total number
of countries off target, by income level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
A1.4 MDG performance: share of countries close to the target in the total number
of countries off target, by alternative typologies . . . . . . . . . . . . . . . . . . . . . . . . . . 161
A1.5 Development indicators, average levels circa 1990 . . . . . . . . . . . . . . . . . . . . . . . . 162
A1.6 Growth has a clear, pervasive effect, but better policy also helps improve the
odds of achieving the MDGs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
A1.7 Small-Hsiao tests of IIA assumption—null hypothesis: odds (outcome-j versus
outcome-k) are independent of other alternatives . . . . . . . . . . . . . . . . . . . . . . . . . 166
A1.8 Predicted probabilities and marginal effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
A1.9 Effects of a one-standard-deviation increase in selected development drivers . . . . 168
A1.10 Probability of being on target or far from the target average . . . . . . . . . . . . . . . . . 169
A1.11 Probability of being on target or close to the target average . . . . . . . . . . . . . . . . . 169
A1.12 Probability of being in percentile (66) or above or in percentile (33) or below . . . 170
A1.13 Classification of economies by region and income, fiscal 2011 . . . . . . . . . . . . . . . 172

T
his year we are facing historic develop-
ment challenges—from natural disasters,
to food and fuel price spikes, and pro-
found change in the Middle East. Despite high
average growth in the developing world, it is
crucial to provide opportunities to those that are
being left behind. Wealthier economies are expe-
riencing slower growth—but development assis-
tance needs remain high. In our interconnected
world, sustainable recovery means supporting
inclusive growth.
Only four years remain until the 2015 dead-
line for reaching the Millennium Development
Goals. The Global Monitoring Report 2011:
Improving the Odds of Achieving the MDGs—
Heterogeneity, Gaps, and Challenges underlines
the urgency of helping countries that are behind
on meeting key targets for extreme poverty, hun-
ger, disease, and child and maternal mortality.
The report lays out the challenges that remain;
analyzes efforts to improve human development;
and assesses the role of growth, policy reforms,
trade, and donor policies in meeting the MDGs.
The findings from this year’s report offer rea-
son for both hope and concern.
Two-thirds of developing countries are on tar-
get or close to being on target for all the MDGs.
Among developing countries that are falling
short, half are close to becoming on track; with
improved policies and faster growth, these coun-
tries could still achieve the targets in 2015 or
soon after. Yet even those middle-income coun-
tries on track to achieve the MDGs are home to
indigenous and socially excluded groups that are
still very poor and often well behind in reaching
Foreword
the goals. Moreover, progress could stall with-
out stronger global growth, expanded access to
export markets for developing countries, and
adequate assistance from donors.
We are making headway against poverty:
based on our best economic projections, the
world remains on track to reduce by half the
number of people living in extreme poverty. We
project that by 2015, 882.7 million people will
be living on less than $1.25 a day, compared with
1.4 billion in 2005 and 1.8 billion in 1990. Yet a
substantial portion of this progress reflects rapid
growth in China and India, while many African
countries are lagging behind: 17 countries are far
from halving extreme poverty, even as the aggre-
gate goals will be reached.
Developing countries as a whole will also
likely achieve the MDGs for gender parity in pri-
mary and secondary education, for access to safe
drinking water, and will be very close on hunger
and primary education completion. But progress
is too slow on meeting goals for child and mater-
nal mortality as well as access to sanitation.
Many of the poorest countries—even some
that have made substantial progress—face severe
difficulties in achieving the MDGs. This is par-
ticularly true for those affected by violence and
fragility. The difficulties reflect the drawbacks of
their initial conditions; by contrast, many middle-
income countries, which entered the 1990s with
better policies, better institutions, and higher
growth, are now in a better position to achieve
the goals. Yet we have seen how improved poli-
cies in low-income countries did contribute to
strong growth in the years before the financial
GLOBAL MONITORING REPORT 2011 xi
xii FOREWORD
crisis. Policy buffers that allowed for active coun-
tercyclical policies softened the impact of the cri-
sis and drove a relatively rapid return to precrisis
growth rates. To substantially reduce poverty and
meet the MDGs, low-income and other develop-
ing countries need to grow faster and shore up
their ability to guard against future shocks.
To help us better understand results on the
ground, this year’s report presents findings and
lessons from impact evaluations in health and
education. Such evaluations often show that
progress in human development has not improved
as much as might be expected, given substantial
recent increases in resources devoted to health
and education services. This is partly because, too
often, scant attention has been given to improv-
ing incentives for rural doctors and health work-
ers, for example, so as to improve the quality of
services. This might explain the slower progress
toward MDGs measured by outcomes (such as
those for health), than those MDGs measuring
access to services, (such as those for education).
A key lesson is that strengthening institutions and
improving incentives—by enhancing the role of
performance in setting the pay of health workers,
for example—are vital to better outcomes.
To regain momentum toward achieving the
MDGs, we need international cooperation on
three fronts:
First, low-income countries in particular
require a strong and stable global economic envi-
ronment to continue growing. While advanced
economies are facing subdued growth and high
unemployment, many fast-growing emerging
markets are seeing inflation pressures build.
With global growth projected at 4.4 percent this
year and next, advanced market economies will
need to repair and reform their financial systems
and tackle their fiscal imbalances in order to
strengthen the recovery. Emerging market econo-
mies must adjust their macroeconomic policies
to reorient growth domestically and avoid pos-
sible overheating.
Robert B. Zoellick
President
The World Bank Group
GLOBAL MONITORING REPORT 2011
Second, low-income countries need to achieve
and sustain more rapid economic growth and
restore their policy buffers. One major challenge
for growth is addressing the infrastructure gap
through stronger public investment management
systems and enhanced efforts to mobilize domes-
tic revenue. Another is to create private sector
opportunities, for local business people as well
as foreign investors. Entrepreneurs’ small enter-
prises can create jobs, opportunity, and hope.
International organizations can offer policy
advice and technical assistance; donors need to
meet aid commitments and strengthen the over-
all effectiveness of aid. The world can also assist
by expanding trade opportunities, particularly
for the poorest countries. Key steps include com-
pleting the Doha Round, and expanding and
improving Aid for Trade, connected to trade
facilitation and building capacity.
Third, fragile states lag the furthest behind
in reaching the MDGs. These countries require
additional support in building institutions and
moving toward a virtuous circle of development,
peace, and security, as discussed in the Bank’s
recently released World Development Report
2011: Conflict, Security, and Development.
The MDGs were designed to provide a frame-
work for the entire international community to
work together toward a common end: making
sure that human development reaches everyone,
everywhere. If these goals are achieved, billions
more people will have the opportunity to benefit
from the global economy. We have four years
left to reach the targets. International financial
institutions, including regional development
banks, are adapting policies, procedures, and
tools to respond to the postcrisis world and to
tailor support for unique country circumstances
and needs—including economies and peoples hit
hard by banking problems, food and fuel crises,
and natural disasters. In doing so, we need to
keep the MDGs firmly in our sights. Reaching
these goals is central to global development.
Dominique Strauss-Kahn
Managing Director
International Monetary Fund
 Acknowledgments
T
his report has been prepared jointly by
the staffs of the World Bank and the
International Monetary Fund (IMF).
The cooperation and support of staff of sev-
eral institutions are also gratefully acknowl-
edged: the African Development Bank (AfDB),
the Asian Development Bank (ADB), the
European Bank for Reconstruction and Devel-
opment (EBRD), the Inter-American Develop-
ment Bank (IDB), as well as the Netherlands
Environmental Assessment Agency (PBL).
Delfin S. Go was the lead author and man-
ager of the report. Brad McDonald led the
team from the IMF. The principal authors
of the chapters were: chapter 1–Delfin S.
Go and Jose Alejandro Quijada; chapter
2–Brad McDonald; chapter 3–Gayle Martin
and Shwetlena Sabarwal; chapter 4–Harry
Anthony Patrinos; and chapter 5–Amy Hey-
man (aid), Mariam Malouche (trade), and
Stefano Curto (international financial institu-
tions). Jose Alejandro Quijada, Sachin Shah-
ria, and William Shaw were key members of
the core team in the overall preparation and
coordination of the report.
Bruce Ross-Larson was the principal
editor.
The work was carried out under the general
guidance of Justin Lin and Hans Timmer at
the World Bank. Supervision at the IMF was
provided by Hugh Bredenkamp and Cath-
erine Pattillo. Advisers to the report include
Shantayanan Devarajan, Shahrokh Fardoust,
Deon Filmer, Ariel Fiszbein, Ann Harrison,
Jeffrey Lewis, Mohammad Zia Qureshi,
Martin Ravallion, and Ritva S. Reinikka.
Several people also provided specific sugges-
tions: Andrew Burns, Jeffrey Chelsky, Punam
Chuhan-Pole, Rui Coutinho, Aart C. Kraay,
Barbara W. Lee, Sonia Plaza, Luis Serven,
Lucio Vinas de Souza, Dominique van der
Mensbrugghe, and Adam Wagstaff.
Several staff members also made valuable
contributions and inputs, including the follow-
ing from the World Bank: Harold Alderman,
Uranbileg Batjargal, Jinzhu Chen, Shaohua
Chen, Stacey Tai Sie Chow, Yohana Dukhan,
Yoichiro Ishihara, Lauren Murphy, Victor
Hugo Orozco Olvera, Israel Osorio-Rodarte,
Prem Sangraula, Jennifer Sturdy, and Edit
Velenyi. Other contributors from the IMF
included Sibabrata Das, Nisreen Farhan, Shaun
Roache, Manrique Saenz, Mika Saito, and Joe
Thornton. Contributors from other institu-
tions included Paul Lucas, Henk Hilderink,
Marcel Kok, Ben ten Brink, and Stefan van der
Esch (PBL); Patrica Laverley and Agnes Soucat
(AfDB); Indu Bhushan, Valerie Reppelin-Hill,
Manju Senapaty, and Gina Marie Umali
(ADB); and Murat Jadraliyev, Anita Taci, and
James Earwicker (EBRD).
Guidance received from the Executive
Directors of the World Bank and the IMF
and their staffs during discussions of the draft
report is gratefully acknowledged. The report
also benefited from many useful comments
GLOBAL MONITORING REPORT 2011 xiii
xiv ACKNOWLEDGMENTS
and suggestions received from the Bank and
IMF management and staff in the course of its
preparation and review.
The multilingual web sites accompanying
the report were produced by Vamsee Kanchi,
Roula Yazigi, Rebecca Ong, and Swati Pria-
darshini Mishra; the main GMR Web address
is www.worldbank.org/gmr2011. Rebecca
Ong and Merrell Tuck-Primdahl managed the
GLOBAL MONITORING REPORT 2011
communication and dissemination activities.
The translation process was coordinated by
Jorge del Rosario.
The design and production of the Global
Monitoring Report 2011 was handled by the
World Bank’s Office of the Publisher, under
the supervision of Stephen McGroarty, Susan
Graham, and Denise Bergeron.
 Abbreviations and Acronyms

ADB Asian Development Bank IDA International Development

AfDB African Development Bank Association
AIDS acquired immune deficiency IFC International Finance
syndrome Corporation
BRICs Brazil, Russia, India, and IFI international financial
China institution
CAT DDO post–natural catastrophe IIA independence of irrelevant
deferred drawdown option alternatives
CCT conditional cash transfer IMF International Monetary Fund
CFM capital flow management LDC least-developed country
CPIA Country Policy and MDB multilateral development bank
Institutional Assessment MDGs Millennium Development
CRW Crisis Response Window Goals
DAC Development Assistance NTM nontariff measure
Committee OECD Organisation for Economic
DDO deferred drawdown option Co-operation and
DFQF duty free, quota free Development
DIME Development Impact PBL Netherlands Environmental
Evaluation Assessment Agency
DMC developing member-country PCL Precautionary Credit Line
DPL development policy lending PRGT Poverty Reduction and
EBRD European Bank for Growth Trust
Reconstruction and PRST Poverty Reduction Strategy
Development Paper
FCL Flexible Credit Line QuODA Quality of Official
FDI foreign direct investment Development Assistance
GDP gross domestic product Assessment
G-20 Group of Twenty RPGs regional public goods
HIV human immunodeficiency SDRs special drawing rights
virus SMEs small and medium enterprises
HRF Haiti Reconstruction Fund TFP Trade Finance Program
IADB Inter-American Development WBG World Bank Group
Bank WEO World Economic Outlook
WTO World Trade Organization

All amounts are presented in U.S. dollars, unless otherwise indicated.

xv
Goals and Targets from the Millennium Declaration
GOAL 1 ERADICATE EXTREME POVERTY AND HUNGER
TARGET 1.A Halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day
TARGET 1.B Achieve full and productive employment and decent work for all, including women and young people
TARGET 1.C Halve, between 1990 and 2015, the proportion of people who suffer from hunger
GOAL 2 ACHIEVE UNIVERSAL PRIMARY EDUCATION
TARGET 2.A Ensure that by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary
schooling
GOAL 3 PROMOTE GENDER EQUALITY AND EMPOWER WOMEN
TARGET 3.A Eliminate gender disparity in primary and secondary education, preferably by 2005, and at all levels of education no
later than 2015
GOAL 4 REDUCE CHILD MORTALITY
TARGET 4.A Reduce by two-thirds, between 1990 and 2015, the under-five mortality rate
GOAL 5 IMPROVE MATERNAL HEALTH
TARGET 5.A Reduce by three-quarters, between 1990 and 2015, the maternal mortality ratio
TARGET 5.B Achieve by 2015 universal access to reproductive health
GOAL 6 COMBAT HIV/AIDS, MALARIA, AND OTHER DISEASES
TARGET 6.A Have halted by 2015 and begun to reverse the spread of HIV/AIDS
TARGET 6.B Achieve by 2010 universal access to treatment for HIV/AIDS for all those who need it
TARGET 6.C Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases
GOAL 7 ENSURE ENVIRONMENTAL SUSTAINABILITY
TARGET 7.A Integrate the principles of sustainable development into country policies and programs and reverse the loss of
environmental resources
TARGET 7.B Reduce biodiversity loss, achieving by 2010 a significant reduction in the rate of loss
TARGET 7.C Halve by 2015 the proportion of people without sustainable access to safe drinking water and basic sanitation
TARGET 7.D Have achieved a significant improvement by 2020 in the lives of at least 100 million slum dwellers
GOAL 8 DEVELOP A GLOBAL PARTNERSHIP FOR DEVELOPMENT
TARGET 8.A Develop further an open, rule-based, predictable, nondiscriminatory trading and financial system (including a
commitment to good governance, development, and poverty reduction, nationally and internationally)
TARGET 8.B Address the special needs of the least-developed countries (including tariff- and quota-free access for exports of
the least-developed countries; enhanced debt relief for heavily indebted poor countries and cancellation of official
bilateral debt; and more generous official development assistance for countries committed to reducing poverty)
TARGET 8.C Address the special needs of landlocked countries and small island developing states (through the Programme of
Action for the Sustainable Development of Small Island Developing States and the outcome of the 22nd special
session of the General Assembly)
TARGET 8.D Deal comprehensively with the debt problems of developing countries through national and international measures
to make debt sustainable in the long term
TARGET 8.E In cooperation with pharmaceutical companies, provide access to affordable, essential drugs in developing countries
TARGET 8.F In cooperation with the private sector, make available the benefits of new technologies, especially information and
communications

Source: United Nations. 2008. Report of the Secretary-General on the Indicators for Monitoring the Millennium Development Goals.
E/CN.3/2008/29. New York.
Note: The Millennium Development Goals and targets come from the Millennium Declaration, signed by 189 countries, including 147 heads of state and
government, in September 2000 (http://www.un.org/millennium/declaration/ares552e.htm) and from further agreement by member states at the 2005
World Summit (Resolution adopted by the General Assembly–A/RES/60/1). The goals and targets are interrelated and should be seen as a whole. They
represent a partnership between the developed countries and the developing countries “to create an environment—at the national and global levels
alike—which is conducive to development and the elimination of poverty.”

W
ith less than five years remaining
to achieve the Millennium Devel-
opment Goals (MDGs), the inter-
national development community has to set
priorities that focus on lagging countries and
sectors and take onboard lessons from past
interventions, reflecting the limited resources
available. To inform this effort, Global Mon-
itoring Report 2011 analyzes the diverse
record in improving human development
across and within developing countries; sum-
marizes the results of impact evaluations of
health and education programs; and reviews
recent developments in global growth, trade,
and donor policies.
The key messages:
• Global progress toward the various targets
continues to be mixed, and country per-
formance is predictably diverse. Among
developing countries that are off track, the
top half are, on average, within 10 percent
of the on-track trajectory. While countries
close to the target may still miss the 2015
deadline, they could achieve the targets
soon after, with improved policies and an
acceleration of growth to precrisis levels.
• For countries that are on track, or close to
it, solid economic growth and good policies
and institutions have been the key factors.
Overview
Progress on both fronts has been evident
since the 1990s. Indeed, policy responses
in the recent global economic downturn
have softened the negative impact, particu-
larly for low-income countries (especially
in Africa).
• This substantial progress is not a reason for
complacency. Without a stable expansion
of the global economy, continuing access
to advanced and developing-country mar-
kets, and adequate assistance from donors,
progress could still break down. Enhancing
the resilience to adverse economic shocks,
including the provision of social safety
programs, will need greater attention and
support.
• Reaching the MDGs is only one milestone,
for there still is much work to do in fos-
tering inclusive growth, reducing inequal-
ity and poverty, and improving health and
education outcomes in even the most suc-
cessful countries. Even the middle-income
countries on track to reach the MDGs have
trailing pockets of indigenous and socially
excluded groups whose odds of reaching
the goals are slim.
• Unsurprisingly, countries with slower
growth and poorer institutions are farthest
behind. Many countries far from the tar-
get are fragile states, reinforcing the need
1
2 OVERVIEW GLOBAL MONITORING REPORT 2011

for the international community to step up
support to these countries.
• Impact evaluations show that the quan-
tity of health and education services has
increased, but not the quality. This might
be one reason that progress has been slower
for MDGs measured by outcomes (like
those for health) than for those measured
by access (like those for education). That
is why improving the incentives for service
providers and consumers—especially mak-
ing service providers directly accountable
to consumers—is so essential to improving
outcomes.
• The growing assistance from new donors—
many in the developing world—will not
compensate for a significant future fall in
aid from traditional donors, particularly if
they pursue different development priori-
ties and practices. The changing aid land-
scape could also have implications for the
transparency of official flows and for the
policies and programs that aid supports.
The diversity of country
performance
The global numbers tell a mixed story.
Progress has been substantial in achieving
the MDGs for gender parity in primary and
secondary education, completion of primary
education, access to safe drinking water, and
eradicating extreme poverty and hunger, in
that order (figure 1). On current trends, and
despite the recent global economic crisis,
developing countries are on track to reach the
global target of cutting income poverty in half
by 2015, thanks in large part to rapid growth
in China and India. Developing countries
will also likely achieve the MDGs for gender
parity in primary and secondary education
and for access to safe drinking water, and
will be very close on hunger and on primary
education completion. Progress is too slow,
however, on health-related outcomes—such
as child and maternal mortality and access
to sanitation—so the world will likely miss
these MDGs by 2015. Most regions are lag-
ging on these health goals, but East Asia and
Pacific, Latin America and the Caribbean,
and Europe and Central Asia are doing better
than other regions.
Poor countries and regions tend to lag in
attaining the MDGs. The low-income coun-
tries lag on all the MDGs. While poverty in
Sub-Saharan Africa has fallen steeply with the
acceleration of growth since 2000, the region
is not on track to meet the poverty reduction
goal. Middle-income countries—both lower
and upper—generally exhibit the best perfor-
mance. Eighty percent of the upper-middle-
income countries (23 of them) have achieved

FIGURE 1 The distance to global MDGs ranges widely

100
90 96%
distance to goal achieved by

91%
developing countries, %

80 90% 88%
70 80%
77%
60 69% 67%
50
57%
40
30
20
10
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child maternal access to access to
povery completion parity parity mortality mortality safe water sanitation
rate (primary) (secondary) under five

Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: Distance to goal achieved in this graph is a weighted average of the latest indicators, using population weights in 2009.
GLOBAL MONITORING REPORT 2011 OVERVIEW 3

or are on track to achieve the extreme poverty have achieved or are on track to achieve the
eradication target. And 72 percent of lower- targets for gender parity in primary and sec-
middle-income countries (34 of them) are set ondary education. Although half the moni-
to reach the target for gender parity in second- tored countries (57) are off target for the pri-
ary education. Both low- and middle-income mary education completion goal, two thirds
countries have made good progress on gender of them (38) are very close.
parity in primary education. Progress is still mixed or poor for access
Even so, the targets remain within reach to sanitation, maternal mortality, and child
for many developing countries. Although mortality. For example, more than 40 percent
more developing countries are off track than of low- to upper-middle-income countries (58
on track in achieving the targets, many off- of them) are lagging significantly on access to
track countries are closer to the goals, thanks sanitation.
to more than a decade of better policy and The variation among lagging countries
faster growth. A country is “close to the is still large, but the average gap is not.
target” if its distance to getting on target is Lagging countries are, on average, 23 per-
smaller than the average gap of all lagging cent behind being on track to achieve all the
countries. Others are “far from the target,” MDGs (table 1). They are close to being on
if their distance to getting on target is bigger track for gender parity in primary educa-
than the average gap. tion (7 percent); gender parity in secondary
Indeed, two-thirds or more of developing education (16 percent); hunger (19 percent);
countries are, on average, on target or close primary education completion (20 percent);
to being on target for all the MDGs (figure 2). and, to some extent, under-five mortality
Many countries are on track to achieve sev- (23 percent). But for each target there are
eral MDGs: gender parity in primary educa- countries with scant progress. For example,
tion (89 of them), gender parity in secondary 17 countries are far from halving extreme
education (82); access to safe drinking water poverty, even as the global goal will be
(66); primary completion rate (55); and wip- reached.
ing out extreme poverty (47). For instance, More important, among countries that are
about 70 percent of developing countries off track, the top half are, on average, about

FIGURE 2 More than two-thirds of developing countries are on track or close to being on track

80
proportion of developing countries, %

89 82
70
60 47
55 66
50 25 58
40 52 53 46 48
18 38
39
30 21 36 35 37
12 30
17 25 23 27
20 19
13 15
10
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

on target close to target far from target

Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: The figure above each bar is the number of countries.
4 OVERVIEW GLOBAL MONITORING REPORT 2011

TABLE 1 Lagging countries are close to getting on target

Average distance to getting on target (gaps, %)

All off-target
countries Countries close to the target Countries far from the target
MDG 1.a Extreme poverty 39 (96) 17 67
MDG 1.c Hunger 19 (60) 9 35
MDG 2.a Primary education completion 20 (96) 9 40
MDG 3.a Gender parity in primary education 7 (22) 4 14
MDG 3.a Gender parity in secondary education 16 (52) 8 29
MDG 4.a Child mortality under five 23 (59) 8 38
MDG 5.a Maternal mortality 32 (80) 11 51
MDG 7.c Access to safe drinking water 25 (76) 14 41
MDG 7.c Access to sanitation 27 (50) 16 34
Simple average 23 11 39
Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: A country is “close to the target” if its distance to getting on target is smaller than the average gap of all lagging countries. It is “far from
the target” if its distance is bigger than the average gap. Figures in parentheses indicate the range of variation (maximum value minus mini-
mum value) of countries off target, by MDG. Averages and numbers of countries cover only those with data, which can vary by MDG.

10 percent off the on-track trajectory. Their
mean distance is only 4–9 percent for gender
parity in primary and secondary education,
child mortality, primary education comple-
tion, and alleviating hunger. Indeed, these
countries close to the target need to increase
primary education completion by only 9.2
percent, on average, to become on track.
Reducing data gaps will improve the
assessment of progress. Poor data availabil-
ity may fail to convey progress or understate
deterioration resulting from shocks and con-
flicts. Among the MDGs, the collection of
data on poverty seems to lag the most. Con-
ducting household income and expenditure
surveys in both large and poor countries is
difficult, often delaying global or regional
poverty updates when the countries with
missing data account for a large share of the
total. The new household surveys employed
in the analysis covered about 43 percent of
the population in developing countries in
2008 and 7.6 percent in 2009. However,
gaps for 2008–10 household surveys remain
in several regions—particularly, South Asia
(pending India’s new household survey, 10.8
percent of the population is covered), Middle
East and North Africa (19.1 percent), and
Sub-Saharan Africa (20.1 percent). Efforts
are already under way at the World Bank to
close the remaining gaps before the end of
2011 to complete and update the time-series
estimate of poverty at the global and regional
levels for 2008. There is also spotty infor-
mation about infectious diseases, such as
malaria and tuberculosis. Other data issues
include reporting errors that severely hamper
the accuracy of the maternal mortality ratio.
The quality, timeliness, and availability of
data are gradually improving, which can be
seen from the World Bank Statistical Capac-
ity Indicator (http://bbsc.worldbank.org); but
additional effort and support for statistical
capacity-building activities will be required
to improve data and close gaps for all MDG-
related indicators.
The role of growth and policy
Starting points—inherited initial condi-
tions—count in MDG performance, but
subsequent growth and policy also matter
greatly. Countries with a higher per capita
GDP in 1990 generally have better MDG
performance. Countries starting with good
policy and institutions also tend to do better.
But initial conditions do not fully determine
outcomes, and economic growth and policy
performance after the initial year may be
more important in meeting the goals. Coun-
tries that have reached or are on track to
reach the targets show, on average, the fast-
est per capita GDP growth over 1990–2009
(table 2). Similarly, countries close to the
GLOBAL MONITORING REPORT 2011 OVERVIEW 5

TABLE 2 Growth and CPIA scores are higher in countries on track or close to being on track
Average values across MDGs (weighted by the number of countries in each MDG category)
Close to Far from
On target the target the target

Average GDP per capita growth (1990–2009) 2.4 1.8 1.2

CPIA index (2009) 3.7 3.5 3.3
Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: The pairwise correlation between average GDP per capita growth and the CPIA index is 0.32 (significant at 0.01). A
country is “close to the target” if its distance to getting on target is smaller than the average gap of all lagging countries. It is
“far from the target” if its distance is bigger than the average gap.

target tend to have faster per capita growth
than countries far from the target. A strong
policy and institutional framework, as mea-
sured by the World Bank’s annual country
policy and institutional assessment (CPIA),
appears to be associated with improved
MDG performance.
Both factors—initial conditions and subse-
quent growth and policy—also point to why
the MDGs are such big challenges for the
poorest and most fragile countries. Middle-
income countries, having grown earlier, often
have better policies and institutions.
Growth has an all-encompassing bear-
ing on the progress of MDGs, while policy
is vital for outcome-based MDGs. Prelimi-
nary econometric results suggest that eco-
nomic growth has a pervasive association
with the odds of achieving the MDGs. For
those countries currently far from the goals, a
strong growth performance seems to catalyze
progress toward the MDGs. And for those
that are closer to becoming on target, growth
seems to be significantly correlated with spe-
cific goals such as primary education comple-
tion and gender parity. Improved policy and
institutions appear to be especially important
for health-related MDGs, such as maternal
mortality, under-five mortality, hunger alle-
viation, and access to safe drinking water; as
outcome-based goals, they depend (in addi-
tion to growth and resources) on a myriad
of factors that improve the quality of public
expenditures and service delivery.
Overall, an increase in growth and in the
quality of policies equivalent to one stan-
dard deviation would appear to put 32 more
developing countries (44 percent) on track to
meet the MDGs. Increasing average growth
in developing countries by one standard devi-
ation is feasible, although the implied rate of
3.8 percent in average developing-country per
capita growth is roughly double its historical
1.8 percent rate (see table 2), it is comparable
both to recent periods of accelerated growth
and to current forecasts of growth for 2010–
15. Achieving the assumed improvement in
policy and institutions may be more chal-
lenging, given the few years to 2015. Because
policy reforms can take time to implement
and bear fruit, it is important to begin now.
Although many close-to-target countries
may still miss the 2015 deadline, with higher
growth and better policies they could still
achieve the targets soon afterward.
Prospects and challenges for
economic growth
The global economic recovery is proceeding
along multiple tracks. Advanced economies
are slowly recovering from the recent global
economic crisis and face continued high
unemployment. By contrast, emerging econo-
mies have seen a robust recovery, and some
faster-growing economies are experiencing
inflation pressures amid signs of overheating.
Thanks in part to their countercyclical policy
responses to the crisis, low-income economies
are seeing a relatively rapid return to precrisis
growth rates. Higher commodity prices are
supporting growth in commodity-exporting
countries, but are sparking concerns over
the affordability of food for the poorer seg-
ments of the population in some low- and
lower-middle-income countries. Global GDP
is forecast to rise by about 4.5 percent in 2011
and 2012, with rates in advanced economies
6 OVERVIEW GLOBAL MONITORING REPORT 2011

TABLE 3 Global output, 2007–14

annual percentage change
Projections

Region 2007 2008 2009 2010 2011 2012–14

World output 5.4 2.9 –0.5 5.0 4.4 4.6

Advanced economies 2.7 0.2 –3.4 3.0 2.4 2.5
Emerging and Developing Economies 8.8 6.1 2.7 7.3 6.5 6.6
Central and Eastern Europe 5.5 3.2 –3.6 4.2 3.7 3.9
Commonwealth of Independent States 9.0 5.3 –6.4 4.6 5.0 4.6
Developing Asia 11.4 7.7 7.2 9.5 8.4 8.5
Middle East and North Africa 6.2 5.1 1.8 3.8 4.1 4.5
Sub–Saharan Africa 7.2 5.6 2.8 5.0 5.5 5.7
Western Hemisphere 5.7 4.3 –1.7 6.1 4.7 4.0

Emerging Economies 9.2 6.3 2.6 7.5 6.7 6.7

Other Developing Economies 7.2 6.0 5.2 6.2 6.1 6.4
Least Developed Countries (LDCs)a 9.0 6.9 5.2 5.3 6.1 6.4
Source: World Economic Outlook.
a. United Nations classification, a subset of developing countries.

several percentage points below those in
emerging and developing economies (table 3).
Good macroeconomic policies remain
crucial to the recovery. Continuing accom-
modative monetary policy in most advanced
economies has alleviated the financial cri-
sis and recession, and monetary conditions
in most emerging and developing countries
began to normalize in 2010. Fiscal policy
is shifting from supporting recovery to cut-
ting deficits, although easy credit conditions
may be slowing the pace of fiscal consolida-
tion among major emerging economies. Low-
income countries have, appropriately, begun
to reverse the unprecedented countercyclical
fiscal response that softened the impact of
the crisis. In many countries, policy makers
can also take steps to improve employment
opportunities, including for young adults.
Sustaining the global recovery demands
greater effort. To avoid unsustainable debt
burdens, the advanced economies must
redress fiscal imbalances and repair and
reform fi nancial systems. Emerging econo-
mies face policy challenges of overheating
and strong capital inflows. Although core
inflation remains subdued in many of them,
inflationary expectations are rising and pol-
icy targets have been exceeded in some cases.
Inflation could threaten otherwise sound pol-
icy frameworks, but concerns about further
currency appreciation are resulting in a slug-
gish monetary policy response in several
emerging economies. Differences in interest
rates and growth prospects have spurred
strong capital flows from the advanced to the
emerging economies, adding to the overheat-
ing and complicating the policy response.
The challenge in low-income countries
is to sustain and accelerate growth through
better policies and greater investment in
infrastructure. Closing the large infrastruc-
ture gap by raising productivity and encour-
aging private investment could substantially
increase per capita income growth. Effective
public investment management—better stra-
tegic planning and analyses of the feasibility
of projects—is critical. The financing of addi-
tional investment also needs to be carefully
managed, to ensure that debt sustainability is
preserved, and should be supported by paral-
lel reforms to strengthen tax revenue.
Rebuilding policy buffers can help protect
growth in the face of future shocks. Good
policies in low-income countries contributed
to strong growth before the crisis. The policy
buffers established then also created the space
for countercyclical policies that softened the
impact of the crisis and drove a fairly rapid
return to precrisis growth rates. To ensure
that higher growth is sustained in the face
of future shocks—a prerequisite for meeting
GLOBAL MONITORING REPORT 2011
the MDGs—low-income and other develop-
ing countries need to rebuild their policy buf-
fers as the recovery proceeds. In addition to
strong, well-designed national policies, inter-
national cooperation is required to restore a
global economic environment conducive to
development and poverty reduction, and to
support the most vulnerable countries.
Making the right policy
interventions—lessons from
impact evaluations in education
and health
Improving the likelihood of more countries
attaining the MDGs depends not just on
more resources but also, and quite critically,
on improving the quality of service provision
through better policies and stronger insti-
tutions. But not much is known about how
exactly to do this. To help inform this ques-
tion, a special feature of this year’s report
presents the findings and lessons from impact
evaluations in health and education.
Development assistance for health and
education has risen to unprecedented lev-
els in volume, but has not generated the
expected improvements in outcomes. And
given the current global economic environ-
ment, citizens in developed and developing
countries alike are demanding more value for
their money. This requires closer attention
to the causal chain linking spending to out-
comes and actions to isolate and strengthen
the weak links in this chain. In recent years,
impact evaluations have emerged as a tool to
do this; and even though their evidence base
is still far from complete, some interesting
lessons are beginning to emerge.
Impact evaluations highlight the discon-
nect between increased public spending and
changes in outcomes. The outcomes have
been disappointing, partly because the spend-
ing focus has been narrowly trained on input
provision, ignoring other parts of the causal
chain that links public spending to better
outcomes. Inputs continue to be important,
but alone they are not sufficient for attaining
the goals in many developing countries. Poli-
cies have failed to account for the incentives
OVERVIEW 7
facing both service providers and consumers.
Too much effort has been devoted to increas-
ing inputs, and not enough to ensuring that
institutions provide services efficiently and
responsively—and that consumers have the
ability and incentive to use services efficiently
and hold service providers accountable for
quality. Some of the lessons are these:
• Reducing user costs and providing cash
transfers has improved the uptake of health
and education services, but issues of qual-
ity remain.
• Health inputs have had to grapple with
uptake and use by citizens, and school-
based and community-based approaches
are tackling this. But more research and
impact evaluations are needed to discover
when and how these approaches work.
• Increasing traditional schooling inputs has
often been ineffective in improving learn-
ing outcomes—as in Bolivia, Colombia,
Kenya, and Nicaragua.
• Service delivery too often fails the poor—
as in Bangladesh, Brazil, Ecuador, Ghana,
India, Indonesia, Morocco, Peru, Tunisia,
and Uganda.
• Pay for performance improved student
learning outcomes—as in India, Israel, and
Kenya. The Rwanda health center pay-for-
performance program increased institu-
tional deliveries and preventive care visits
by young children and improved the qual-
ity of prenatal care.
• New approaches are being designed to
improve service delivery, and an evidence
base on the effectiveness of these approaches
is beginning to take shape.
These are just some of the compelling mes-
sages from the evaluations summarized in
chapter 3.
Although designing the right approach
to improving outcomes is complex and
depends on context, a systematic evidence
base generated through rigorous impact
evaluations can provide useful guidance
for policy makers. The information base on
impact evaluations is far from complete, and
much more work is needed before the most
8 OVERVIEW
pressing questions can be answered. But some
new approaches show promise in improving
incentives and in strengthening the account-
ability of service provision.
Assisting the poorest of the
poor—socially excluded groups
Reaching the MDGs requires addressing
the plight of the world’s socially excluded
groups, including indigenous people, ethnic
minorities, and linguistic groups. They make
up a sizable proportion of the world’s people
and an even greater share of the world’s poor.
Turning the situation around will therefore
require widespread and sustainable economic
growth, as well as specific interventions to
reach these groups.
Most MDG indicators for indigenous
people and ethnic minorities are worse than
population averages. This is true for under-
five mortality; adult literacy; school enroll-
ment, completion, and achievement; gender
equity; water deprivation; child nutrition;
and, especially, poverty reduction. Most
countries in Latin America with sizable indig-
enous populations, for example, show almost
no poverty reduction for those groups.
Programs can meet the needs of indige-
nous people and ethnic minorities. Bilingual
education programs can promote national
language acquisition, school completion, and
subsequent earnings gains, contributing to
multiple goals—and be cost effective. Con-
ditional cash transfer programs can promote
schooling, health, and poverty reduction;
and these programs result in disproportion-
ate gains for minority populations, par-
ticularly in countries with large vulnerable
populations.
Attaining the MDGs for indigenous peo-
ple and ethnic minorities requires innova-
tive approaches. These people may be hard
to reach because they live in remote locations
with poor transportation. They may also
suffer from social and economic discrimi-
nation and government neglect. So assisting
them may require more complex interven-
tions than those for the general population.
The lack of data also complicates the design
GLOBAL MONITORING REPORT 2011
and evaluation of programs. The more suc-
cessful programs, such as those in Asia, have
extended economic opportunities and pro-
vided cash or in-kind assistance, thus allow-
ing these groups to use the targeted assistance
more effectively. Other countries may need to
target these groups more tightly and raise the
quality of services by increasing the account-
ability of service providers to their clients.
In addition to assisting the indigenous
peoples, more inclusive growth and equal-
ity within countries will also benefit people
in the bottom quintiles and lift more people
out of poverty. The case of Brazil points to
two lessons: (1) reforms to social policies and
programs to make them more pro-poor (if
fiscally possible) can play an important role
in sustaining poverty reduction, even during
a period of economic stagnation; and (2) sen-
sible macroeconomic and trade policies need
not hurt the poor and, in the specific case of
taming hyperinfl ation, are likely to make a
significant contribution in the fight against
poverty, even when that is not the primary
objective.
Progress in the international
development framework
The international development framework
functioned well in coping with the crisis.
Governments and international institutions
cooperated well in the face of recession, thus
avoiding the perils of a downward protec-
tionist spiral, maintaining aid, and boost-
ing emergency financial resources. Financing
from the international institutions jumped
sharply, leading to a general increase in their
resources. Although recent research suggests
that declines in aid have tended to deepen for
several years after banking-related crises, aid
levels from countries in 2010 have not yet
been constrained by concerns over rising fis-
cal deficits. Some major-donor governments
remained dedicated to maintaining aid levels
and others announced cuts. Even so, official
development assistance (ODA) from members
of the Development Assistance Committee
(DAC) of the Organisation for Economic Co-
operation and Development (OECD) rose to
GLOBAL MONITORING REPORT 2011
its highest level, at $128.7 billion, an increase
of 6.5 percent over 2009 in real terms. Devel-
oping countries are also benefiting from new
donors (including disbursements of some
$9–$10 billion a year from donors that are
not members of DAC) and from a sharp
rise in donations from the private sector in
advanced countries.
The past tumultuous decade has ushered
in significant changes in the assistance poli-
cies of international institutions. They have
developed a results-based, country-driven
assistance framework grounded in regular
reviews of country strategy and independent
evaluations. A more diverse and flexible range
of fi nancing instruments helped them tailor
assistance to the needs of particular countries
(such as those affected by conflict) and in par-
ticular situations (such as disaster relief and
crisis assistance). They are also doing more
in providing knowledge—through loans and
technical assistance, and global programs
and projects—as well as free information to
the global community.
The growing assistance from emerging
donors (many in the developing world) is
welcome but may not compensate fully for a
significant fall in aid from traditional donors,
to the extent that the emerging donors pursue
different development priorities and practices.
This changing aid landscape could also have
implications for the transparency of official
flows and the policies and programs that aid
supports.
Trade integration and facilitation remain
essential for inclusive growth and poverty
reduction. World trade, now recovering at
about double the 2002–08 rate of growth,
remains well below the precrisis peak and
OVERVIEW 9
even lower than the level it would have
achieved if it had continued the 1995–2008
trend. The rise in protectionist measures dur-
ing the crisis, which particularly affected
the exports of least-developed countries,
appears to be receding. Solidifying an open,
rules-based international trade regime can be
accomplished best by concluding the Doha
Round.
The global community can support pov-
erty reduction through improving trade inte-
gration in low-income countries. Poor-coun-
try market access could improve significantly
if rich countries extended duty-free, quota-
free access to all poor-country exports and
simplified rules of origin in preference agree-
ments. Efforts also are required to ensure
that poor countries can access trade fi nance
at reasonable cost, along with improvements
in data and a review of whether banking
regulations impose excessive capital require-
ments on trade finance transactions. Regional
trade agreements should support open trade
through low external tariffs, while technical
assistance to developing-country trade nego-
tiators would support deeper regional inte-
gration. More financial resources and techni-
cal assistance are needed to strengthen trade
facilitation and to reduce supply constraints
on poor-country exports. These efforts
should include increased commitments for
aid for trade (which in real terms stagnated
in 2009) and greater use of public-private
partnerships. Further efforts are required to
connect landlocked countries and lagging
regions to regional and international markets.
Logistical improvements at the subnational
level are also critical for connecting rural and
remote areas in developing countries.

of MDG Progress
W
ith less than five years left to
achieve the Millennium Develop-
ment Goals (MDGs), the inter-
national development community is show-
ing renewed urgency to assess the various
development efforts, especially in light of the
recent global economic crisis and the still-
fragile recovery. What are the prospects and
challenges for reaching the goals? Answers
are clearly linked to the complex tapestry of
progress that lies below the global numbers.
The Global Monitoring Report [GMR]
2011 extends the forward-looking analy-
sis started in last year’s report by examin-
ing more carefully the diversity of progress
and its implications for the remaining gaps
and challenges. It complements that report’s
analysis of the impact of the global crisis on
the MDGs.
A key observation on the progress toward
the MDGs is its diversity. At the aggregate
and regional levels, low-income countries,
particularly fragile states and those in Sub-
Saharan Africa, lag because of a combination
of low starting points and difficult circum-
stances. Behind those aggregate numbers,
however, the great diversity of performance
across indicators, countries, and groups of
countries requires further analysis. That is
the subject of this chapter.
Rendille villagers in northern Kenya scoop the dregs from a water tank filled only the night before by a government truck but already drained below the level
of its spigot. They must wait a week for the next delivery.
1
The Diversity
Several questions demand answers: How
many countries are off target, and how far
are they from the goals? Why are some coun-
tries behind? And what factors are key to
improving the odds that off-target countries
can reach the goals?
Looking under global progress
The global numbers tell a familiar, mixed
story (figure 1.1). The latest information
confirms that progress toward the MDGs
remains substantial on gender and educa-
tion, access to safe drinking water, extreme
poverty, and hunger, in that order. On cur-
rent trends and despite the recent global eco-
nomic crisis, the world is on track to reach
the global target of cutting income poverty
in half by 2015. Thanks to rapid growth in
China, the East Asia and Pacific region has
already halved extreme poverty. Developing
countries will also likely achieve the MDGs
for gender parity in primary and secondary
education and for access to safe drinking
water, and will be very close on hunger and
the primary education completion rate.
Progress continues to lag in health-related
development outcomes, such as child and
maternal mortality and access to sanitation.
New data and methodologies indicate much
11
12 THE DIVERSITY OF MDG PROGRESS GLOBAL MONITORING REPORT 2011

FIGURE 1.1 Current global distance to the MDGs is wide ranging

100
90 96%
distance to goal achieved by

91%
developing countries, %

80 90% 88%
70 80%
77%
60 69% 67%
50
57%
40
30
20
10
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child maternal access to access to
povery completion parity parity mortality mortality safe water sanitation
rate (primary) (secondary) under five

Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: Distance to goal achieved in this graph is a weighted average of the latest indicators, using population weights in 2009. In this and other graphs in the chapter, the focus is on
MDGs with well-defined targets and time-series data to assess progress.

more progress than previously thought in
reducing maternal mortality, but that is still
the MDG that lags the most. On current
trends, the world will likely miss these three
targets by 2015. Most regions are off track,
but East Asia and the Pacific, Latin America
and the Caribbean, and Europe and Central
Asia are doing somewhat better than others.
Poor countries and regions tend to lag in
attaining the MDGs. As a group, they lag
on all the MDGs and are unlikely to reach a
single target by 2015. Generally, fewer low-
income than middle-income countries are on
target to achieve each MDG (figure 1.2). The
number of countries in each income group
does not differ greatly, so this is not the result

FIGURE 1.2 Fewer low-income countries are on track to achieve the MDGs

100
proportion of developing countries

90 37
23 32
80 28 34
25
by income level, %

70 7 32
60 18
25 23 30
10 19
50
20
40 8 11 16 13
6 15 11
30 10
20 5
2 4
10 1
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

upper-middle-income countries lower-middle-income countries low-income countries

Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: The number above each bar refers to the number of countries attaining that MDG.
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 13

of the distribution of countries. In fact, about
40 countries are currently classified as low
income, compared with 54 lower-middle-
income and 48 upper-middle-income coun-
tries (see appendix 1 for the classification).
Nor do the results arise from missing data in
low-income countries because the availabil-
ity of data also shows little variation among
income groups (see appendix table A1.1). At
the global level, the latest poverty data remain
at 2005, and box 1.1 explains why.
The pattern more likely stems from the
starting points—especially incomes, which
matter greatly in attaining the MDGs. As
several studies show, recent achievements are
obscured by poor past performance and by
the disproportionate challenges the MDGs
pose in many Sub-Saharan African and other
poor countries.1 The longer the distance to
the 2015 targets, the more ambitious the
goals appear and the steeper the path to
achieve them. Ravallion and the World Bank
and IMF discussed how higher starting pov-
erty rates are generally associated with a
lower responsiveness (elasticity) of poverty
to economic growth. 2 Countries in Sub-Sa-
haran Africa implemented reforms later than
others and therefore benefited much later
from accelerating economic growth. How-
ever, after showing no decline for much of

BOX 1.1 Poverty data and projections

New poverty projections at the World Bank are
the result of several changes—new and more
recent household surveys, updates of historical
consumption per capita from national accounts,
and a new forecast of per capita consumption
growth. For this report, the poverty forecast
includes 62 new household surveys out of a total
of 123 countries, which reflect methodological
advances in newer surveys and changes in the
underlying distribution of income not measured
by changes in mean income or expenditure. The
forecast therefore captures changes in income
inequality in the new surveys. However, it
assumes inequality is unchanged in other coun-
tries. Some of the effects of food and fuel price
shocks in 2008 are captured in the new surveys.
Based on the economic projections of devel-
oping countries at the International Monetary
Fund and the World Bank, the world remains on
track to reduce by half the number of people liv-
ing in extreme poverty. The number of people
living on less than $1.25 a day is projected to be
882.7 million in 2015, which is lower than the
previous estimate of 918 million (see the table
on the next page). The decline results mainly
from data changes for India, which showed
a more rapid growth of per capita consump-
tion than previously reported in the national
accounts. This estimate will be updated further
when India’s forthcoming household survey for
2008 is completed. That survey will provide a
more accurate estimate of household consump-
tion for different income groups. Although the
poverty numbers for East Asia and the Pacific
remain relatively stable, China’s poverty rate
and number (at the poverty level of $1.25 a day)
have decreased further, based on the new 2008
household survey and a higher growth rate of its
household income. Projections for Sub-Saharan
Africa are slightly better than previously esti-
mated: its extreme poverty at $1.25 a day is pro-
jected to be 35.8 percent in 2015, lower than the
previous forecast of 38.0 percent, because of its
higher recent growth performance and growth
forecast. However, several of Africa’s household
surveys for 2008 still need to be completed (see
the discussion of gaps below).
The new household surveys employed in the
forecast cover about 43.1 percent of the popu-
lation in developing countries in 2008 and 7.6
percent in 2009 (see the figure on the next page).
However, gaps for 2008–10 household surveys

continued
14 THE DIVERSITY OF MDG PROGRESS GLOBAL MONITORING REPORT 2011

BOX 1.1 Poverty data and projections (continued)

Estimates of poverty reduction on a poverty line of $1.25 and $2.00 a day, by region
Region 1990 2005 2015 1990 2005 2015

Population living on less than $1.25 a day (%) People living on less than $1.25 a day (millions)

East Asia and Pacific 54.7 16.8 5.9 873.3 316.2 119.0
China 60.2 15.9 4.8 683.2 207.7 66.1
Europe and Central Asia 2.0 3.7 1.2 9.1 17.3 5.8
Latin America and the Caribbean 11.3 8.2 4.7 49.6 45.1 29.1
Middle East and North Africa 4.3 3.6 1.3 9.7 11.0 4.8
South Asia 51.7 40.3 22.4 579.2 595.6 379.3
India 51.3 41.6 22.4 435.5 455.8 276.8
Sub-Saharan Africa 57.6 50.9 35.8 295.7 388.4 344.7
Total 41.7 25.2 14.4 1,816.6 1,373.5 882.7

Population living on less than $2.00 a day (%) People living on less than $2.00 a day (millions)

East Asia and Pacific 79.8 38.7 19.7 1,273.7 728.7 399.4
China 84.6 36.3 15.4 960.8 473.7 213.4
Europe and Central Asia 6.9 8.9 4.5 31.9 41.9 21.4
Latin America and the Caribbean 19.7 16.6 10.7 86.3 91.3 66.3
Middle East and North Africa 19.7 16.9 7.2 44.4 51.5 26.2
South Asia 82.7 73.9 57.1 926.0 1091.5 967.2
India 82.6 75.6 56.9 701.6 827.7 702.0
Sub-Saharan Africa 76.2 73.0 57.7 391.2 556.7 555.6
Total 63.2 47.0 33.1 2,753.5 2,561.5 2,036.1

Source: World Bank staff calculations from PovcalNet database.

remain at the regional level: South Asia (pending and Europe and Central Asia, 94.4 percent.
India’s new household survey), 10.8 percent of Efforts are already under way at the World Bank
population is covered; Middle East and North to close remaining gaps before the end of 2011
Africa, 19.1 percent; Sub-Saharan Africa, 20.1 to complete and update the time-series estimate
percent; Latin America and the Caribbean, 84.1 of poverty at the global and regional levels for
percent; East Asia and the Pacific, 90.3 percent; 2008.

Population coverage of the latest available household surveys is

increasing
50
45 43.10
population in developing

40
countries, 2009, %

35
30
25.09
25
20
15 10.90
10 7.65
4.66 4.46
5 1.50 0.19 0.08 1.13
0.11 0.02
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Source: World Bank staff calculations based on household data from the PovcalNet database.
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 15

the 1990s, Sub-Saharan Africa’s poverty has parity in secondary education, where 82 per-
fallen steeply since 2000. cent of countries (14 countries) are on target.
Middle-income countries—both lower South Asia is also closing the development
and upper—generally exhibit the best per- gap. Its performance is encouraging for pri-
formance. For example, 80 percent of coun- mary education completion, gender parity,
tries in the upper-middle-income bracket (23 maternal mortality, and access to safe drink-
countries) have achieved or are on track to ing water, although performance needs to
achieve the extreme poverty target. Similarly, improve for extreme poverty and hunger.
72 percent of lower-middle-income coun- Eastern Europe shows important progress
tries (34 countries) are reaching the target on extreme poverty (the region’s countries
for gender parity in secondary education. In account for 32 percent of countries on tar-
one area, however—gender parity in primary get). Advances are also significant for child
education—progress in both low-income and and maternal mortality. Challenges remain,
middle-income countries is substantial. however—particularly in Central Asia,
Latin America and the Caribbean is show- where progress on extreme poverty, child and
ing excellent results and leading in several maternal mortality, and access to safe drink-
indicators: hunger, primary education com- ing water is relatively low. For instance, no
pletion, gender parity in secondary educa- Central Asian country is on track to achieve
tion, access to safe drinking water, and access the child mortality goal; but the target is still
to sanitation. Even so, it faces serious chal- within reach or close to becoming on target
lenges on maternal mortality, with just 10 per- for five countries in the subregion (see below
cent of countries (three countries) that have and appendix 1 for a discussion of the con-
reached or are on track to reach the 2015 tar- cept, close to becoming on target).
get (figure 1.3). The Middle East and North Africa is per-
East Asia and Pacific is progressing in forming relatively well on gender parity in sec-
many areas, particularly on education, gender ondary education and on access to sanitation.
parity, and access to safe drinking water. Its However, it needs faster progress on extreme
performance is particularly good for gender poverty, hunger, and maternal mortality.

FIGURE 1.3 Countries on target to achieve the MDGs, by region

100
proportion of developing countries

90
80
70
in each region, %

60
50
40
30
20
10
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

East Asia and Pacific Europe and Central Asia Latin America and the Caribbean
Middle East and North Africa South Asia Sub-Saharan Africa

Source: World Bank staff calculations based on data from the World Development Indicators database.
16 THE DIVERSITY OF MDG PROGRESS GLOBAL MONITORING REPORT 2011

Sub-Saharan Africa lags the other regions
but can point to some encouraging results.
Progress is quite good on extreme poverty (9
countries), hunger (8 countries), gender par-
ity in primary education (27 countries), and
access to safe drinking water (15 countries).
Goals related to child and maternal mortality,
access to sanitation, and primary education
completion require stepped-up efforts.
Several low-income countries are doing
well. A look beneath the aggregate global
statistics shows not just middle-income
countries doing well, but many low-income
countries, too (table 1.1). A recent study by

TABLE 1.1 Several low-income countries are achieving the MDGs

Low-income countries that have Low-income countries that are on track to
Selected MDG achieved the goal achieve the goal

Poverty Cambodia Central African Republic

Kenya Ethiopia
Mauritania Ghana
Universal primary education Myanmar None
Tajikistan
Tanzania
Gender parity in primary Bangladesh Benin
education Gambia, The Burkina Faso
Ghana Burundi
Haiti Cambodia
Kenya Comoros
Kyrgyz Republic Ethiopia
Madagascar Guinea
Malawi Nepal
Mauritania Sierra Leone
Myanmar Solomon Islands
Rwanda Togo
Tanzania
Uganda
Zambia
Zimbabwe
Gender parity in secondary Bangladesh Gambia, The
education Kyrgyz Republic Malawi
Myanmar Mauritania
Nepal
Rwanda
Under-five mortality None Bangladesh
Eritrea
Lao PDR
Madagascar
Nepal
Access to safe drinking water Afghanistan Benin
Burkina Faso Cambodia
Comoros Guinea
Gambia, The Uganda
Ghana
Korea, Dem. People’s Rep.
Kyrgyz Republic
Malawi
Nepal
Access to sanitation Lao PDR Rwanda
Myanmar
Tajikistan
Source: World Development Indicators database (as of March 2011).
Note: List of low-income countries is based on the new World Bank classification for fiscal year 2011 (see appendix 1).
GLOBAL MONITORING REPORT 2011
Leo and Barmeier confirmed that progress in
individual African and poor countries was
surprisingly strong.3
Variation behind the aggregates. The
typical global and regional summaries amass
data for countries of dissimilar development
and types—fragile, low-income, and middle-
income countries. For example, the Europe
and Central Asia region covers such middle-
income countries as Albania and Bulgaria
and such low-income countries as Tajiki-
stan and Uzbekistan. Among the developing
countries in Sub-Saharan Africa, some are
middle-income countries (such as Mauri-
tius and South Africa); some lower-middle-
income countries (such as Angola and the
Democratic Republic of Congo) are resource
rich, but their levels of development may
be closer to those of low-income countries.
Progress has been more heterogeneous than
is shown by the aggregate figures.4
Country progress, not just global or
regional
Although the MDGs were conceived as global
targets to spur development efforts and sup-
port to poor countries, it is necessary to mea-
sure and describe progress at the country or
other level to better understand advances and
remaining gaps (see box 1.2). To untangle
the aggregate numbers, we introduce alterna-
tive ways of analyzing MDG progress with
a focus on lagging countries. Our approach
characterizes MDG progress by country per-
formance and by different typologies—such
as initial income and policy-institutional con-
ditions, subsequent growth and policy-insti-
tutional achievement, the poorest countries
versus the others, level of fragility, and export
sophistication and shipping connectivity
(broadly following Collier and O’Connell5 ).
This approach provides some empirical expla-
nations of the links between development’s
drivers and different rates of MDG progress.
Where do countries stand?
Several global targets will be missed, but the
following questions also matter: How many
THE DIVERSITY OF MDG PROGRESS 17
countries are attaining the goals, and how
many are behind? Are lagging countries far
from the goals? And how many are already
close? Answers from available information
are surprisingly hopeful.
To examine them, we distinguish coun-
tries that are on target (or on track)—that is,
their annual rate of progress between the ref-
erence year of MDGs in 1990 (or the closest
available) to the latest year of data implies the
right trajectory or trend to meet or exceed the
goals—and those that are off target (or lag-
ging). We look fi rst at the gaps of off-target
countries because they are the countries that
need most attention.
First, the variation among lagging coun-
tries is large, but the average gap is not
(table 1.2). Lagging countries are, on average,
only 23 percent away from being on track to
achieve all the MDGs. They are especially
close to the targets for gender parity in pri-
mary education (average gap is 7 percent);
gender parity in secondary education (16
percent gap); hunger (19 percent gap); pri-
mary education completion (20 percent gap);
and, to some extent, under-five mortality (23
percent gap). But for each target there are
countries where progress has been scant. For
example, several countries are far from halv-
ing extreme poverty, even as the global goal
will be reached.
Progress is mixed or poor on access to safe
drinking water, access to sanitation, mater-
nal mortality, and extreme poverty. Even so,
the mean gaps of all lagging countries are less
than 50 percent from the targets on access to
safe drinking water (25 percent) and access
to sanitation (27 percent), and no worse than
40 percent on maternal mortality (32 percent)
and extreme poverty (39 percent).
Different starting points will imply a
unique trajectory for each country to reach
a specific goal. Hence, comparing the slope
or growth rate of the historical path with the
required one is a good way to assess progress.
Leo and Barmeier define lagging countries as
close to target if their trajectory is within 50
percent of the required progress to reach the
goals, earning half a full score.6 In our meth-
odology, we do not assign numerical scores in
18 THE DIVERSITY OF MDG PROGRESS
BOX 1.2 Gaps and issues in measuring development outcomes beyond 2015
Measuring broad development outcomes through
specific indicators is never precise, so the diversity in
MDG performance is partly the result of indicator
or measurement issues. Although the purpose of this
report is not to focus on these issues, they are impor-
tant for future deliberations of MDGs beyond 2015.
Some of the issues are the following:
• Outcomes versus outputs. Some MDG indicators
(such as under-five mortality and maternal mortal-
ity) quantify development outcomes, whereas oth-
ers (such as the primary education completion rate
and ratios of girls to boys in education) are specific
intermediate outputs. It is not surprising that the
more outcome-based health MDGs often progress
more slowly than others. But poverty reduction, a
broad development outcome, is progressing rap-
idly. Because of the inherent and varying difficulty
of demonstrating progress and results, choosing
between outcomes and outputs may touch on issues
of political economy. For example, a target like uni-
versal primary school enrollment is easily embraced
because it is easier to show progress by getting chil-
dren through school than it is to make sure they
learn something, which may also be harder to mea-
sure. By contrast, learning outcomes as an objec-
tive are often resisted when the jobs and pay of
this manner or use an arbitrary cutoff point of
50 percent. Although we use the trend devia-
tions or differences in the two growth rates to
defi ne the gaps, the actual gaps are retained
to classify countries into groups according
to their progress, to measure the mean gaps
of each group, and to identify countries that
are within 10 (or 20) percent of becoming on
target. The mean gaps of lagging countries
are all less than 50 percent across the MDGs,
and they provide data-specific cutoff points
to split the off-target countries into two sub-
groups: above average and below average.
Countries in the top half are “close to the tar-
get,” whereas countries in the bottom half are
“far from the target” (appendix 1 explains
the approach in more detail).
GLOBAL MONITORING REPORT 2011
teachers are at stake, partly because the outcomes
also depend on other factors beyond the control of
teachers. Take Tanzania as an example. It received
an MDG award at the 2010 United Nations sum-
mit for its rapid progress on the primary education
completion rate, but the ultimate development goal
of improving learning outcomes of Tanzanian chil-
dren remains problematic.a The point is that some
meaningful development outcomes rest outside the
scope of the MDGs, and it is important to begin
to develop the auxiliary indicators and information
base to monitor them.
• Missing targets. Some specific development out-
comes are not defined or are missing. Economic
growth, particularly inclusive growth, is also
excluded from the MDGs, as noted by many com-
mentators. Its centrality as a means to achieve the
MDGs is nonetheless monitored in the Global
Monitoring Report framework. Missing global
public goods include climate change–related goals
(such as reducing carbon emissions) and market
access for developing countries.
• Targets versus trends. Although Sub-Saharan
countries as a group will fi nd it difficult to meet
the poverty goal by 2015, they are progressing far
above historical trends. Therefore, deviations from
the targets versus deviations from past trends also
More important, among countries that are
off track, the top half are, on average, only
about 11 percent away from being on target.
The mean distance of this subgroup is only
4–9 percent for gender parity in primary and
secondary education, child mortality, primary
education completion, and hunger. Indeed,
countries close to the target need to increase
primary education completion only by 9.2
percent (or 1.5 percent a year), on average, to
be on track to reach the 2015 target.
However, the rather uneven distribution
also points to serious problems for the bot-
tom half of the off-target countries, those
far from the target among the lagging coun-
tries—they are disproportionately far from
the targets, especially for poverty (67 percent)
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 19

BOX 1.2 (continued)

matter. A related, wider issue is whether the MDGs
should be absolute or relative targets.b
• Data gaps. Poor data availability may fail to con-
vey progress or understate deterioration resulting
from shocks and conflicts. Among the MDGs, the
collection and dissemination of poverty aggregates
seem to lag the most. Conducting and complet-
ing household income and expenditure surveys in
large countries is difficult, often delaying global or
regional poverty updates because of the weights
of these countries in the aggregates. There is also
spotty information about infectious diseases, such
as malaria and tuberculosis. Other data issues
include reporting errors that severely compromise
the accuracy of the maternal mortality ratio. And
hunger is assessed only indirectly, through mini-
mum food intake and its deprivation.
• Metrics issues in some MDGs. When targets are
measured in proportionate amounts, such as reduc-
ing by half the proportion of people living on
less than $1.25 a day, problems can arise at both
extremes. For low-income countries with high ini-
tial poverty rates, many of which are in Africa, the
greater distance to the goal makes the target harder
to reach; for middle-income countries where poverty
rates are less than 10 or even 5 percent, reducing the
rate further is also difficult and may entail assisting
the hard-to-reach populations (chapter 4). The ratios
of girls to boys in schools may be stagnant at 97–99
percent in some higher-middle-income countries
because of different enrollment ratios between girls
and boys. Boys may be lagging in completion rates
(for example, at the primary level in Uruguay and
at the secondary level in the Russian Federation).
In addition, country figures can vary from interna-
tional ones because of differences between national
education systems and the International Standard
of Education Classification (ISCED) used in multi-
lateral development agencies—as well as differences
in coverage and even population estimates.
• Averages and weights. Large countries such as
China, India, and Nigeria dominate their respec-
tive regional averages, especially on measures, such
as poverty, where population is the weight. So the
pattern would likely change if the reference unit
pertained to individual countries, not regional or
global aggregates. For example, many poor coun-
tries, including Bangladesh, Bolivia, the Lao Peo-
ple’s Democratic Republic, Malawi, Mozambique,
Nepal, and Niger are registering major achieve-
ments on difficult MDGs such as child mortality.
a. Uwezo Tanzania 2010.
b. ODI 2010.

TABLE 1.2 Lagging countries are close to getting on target

Average distance to getting on target (gaps, %)

All off-target
countries Countries close to the target Countries far from the target
MDG 1.a Extreme poverty 39 (96) 17 67
MDG 1.c Hunger 19 (60) 9 35
MDG 2.a Primary education completion 20 (96) 9 40
MDG 3.a Gender parity in primary education 7 (22) 4 14
MDG 3.a Gender parity in secondary education 16 (52) 8 29
MDG 4.a Child mortality under five 23 (59) 8 38
MDG 5.a Maternal mortality 32 (80) 11 51
MDG 7.c Access to safe drinking water 25 (76) 14 41
MDG 7.c Access to sanitation 27 (50) 16 34
Simple average 23 11 39
Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: A country is “close to the target” if its distance to getting on target (that is, its gap of trajectory) is smaller than the average gap of all lagging countries.
Otherwise, it is “far from the target” (that is, its distance is greater than the average gap). Figures in parentheses indicate the range of variation (Maximum
value—Minimum value) of countries off target, by MDG. Averages and numbers of countries cover only those with data—and that may vary by MDG. See
appendix 1 for more details.
20 THE DIVERSITY OF MDG PROGRESS GLOBAL MONITORING REPORT 2011

TABLE 1.3 Many countries are within 10–20 percent of being on target
Distribution of lagging countries

Gap ≤ 10 percent Gap ≤ 20 percent

Number of Proportion of Number of Proportion of

countries countries (%) countries countries (%)
MDG 1.a Extreme poverty 9 24 13 34
MDG 1.c Hunger 10 33 18 60
MDG 2.a Primary education completion 23 40 39 68
MDG 3.a Gender parity in primary education 28 74 36 95
MDG 3.a Gender parity in secondary education 16 42 23 61
MDG 4.a Child mortality under five 33 31 48 46
MDG 5.a Maternal mortality 20 21 37 39
MDG 7.c Access to safe drinking water 10 15 32 48
MDG 7.c Access to sanitation 6 6 25 26
Simple average 17 32 30 53
Source: World Bank staff calculations based on data from the World Development Indicators database.

and maternal mortality (51 percent). And
the range of variation is considerably large
among countries off target. For extreme pov-
erty and primary education completion, the
gap between the countries closest to and far-
thest from being on target is 96 percent, a fact
that clearly illustrates the diversity of perfor-
mance. This is the case for El Salvador and
Uzbekistan on extreme poverty reduction and
for Bhutan and Djibouti on primary comple-
tion rates.
Indeed, many lagging countries are
already within striking distance. From
another perspective, table 1.3 provides the
proportion of countries within 10 percent
or 20 percent of getting on target. A third of
off-target countries have, on average, a gap
of 10 percent or less from being on target
across the MDGs. Countries like Bangladesh
(extreme poverty, hunger, and maternal mor-
tality), Indonesia (hunger, child and maternal
mortality, access to safe drinking water), and
Mali (gender parity in primary education and
access to safe drinking water) are in this cate-
gory. (Table 1.4 lists these countries by MDG.)
More than half have a gap of 20 percent or
less. Of the countries within 20 percent of tar-
get, the best results are for gender parity in
primary education, primary education com-
pletion, gender parity in secondary education,

TABLE 1.4 Lagging countries within 10 percent of being on target to achieve the MDGs
MDG 2.a MDG 3.a MDG 3.a MDG 4.a
MDG 1.a Primary Gender parity Gender parity Child MDG 5.a MDG 7.c MDG 7.c
Extreme MDG 1.c education in primary in secondary mortality Maternal Access to safe Access to
poverty Hunger completion education education under five mortality drinking water sanitation

Bangladesh Bangladesh Bhutan Belize Bulgaria Algeria Algeria Azerbaijan Botswana

Burkina Faso Bolivia Cambodia Cape Verde Congo, Rep. Antigua and Bangladesh Colombia Brazil
Barbuda
El Salvador Egypt, Arab Comoros Chile Georgia Argentina Brazil Eritrea Dominican
Rep. Republic
Guinea Indonesia Cuba Congo, Dem. Grenada Belarus Cambodia Haiti Morocco
Rep.
India Jordan El Salvador Congo, Rep. Guatemala Bhutan Cape Verde Indonesia Peru
Lao PDR Kenya Gambia, The Djibouti Macedonia, Cape Verde Dominican Iran, Islamic Turkey
FYR Republic Rep.
Lesotho Nigeria Ghana El Salvador Madagascar Colombia Egypt, Arab Kiribati
Rep.
Philippines Pakistan Guatemala Grenada Morocco Dominican Ethiopia Mali
Republic
Uganda Rwanda Honduras Guatemala Pakistan Ecuador Haiti Myanmar
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 21

TABLE 1.4 Lagging countries within 10 percent of being on target to achieve the MDGs (continued)
MDG 2.a MDG 3.a MDG 3.a MDG 4.a
MDG 1.a Primary Gender parity Gender parity Child MDG 5.a MDG 7.c MDG 7.c
Extreme MDG 1.c education in primary in secondary mortality Maternal Access to safe Access to
poverty Hunger completion education education under five mortality drinking water sanitation

Zambia Iraq Guinea- Russian Ethiopia India Venezuela,

Bissau Federation R.B. de
Jamaica Jamaica Senegal Guatemala Indonesia
Kyrgyz Lao PDR Solomon Honduras Lao PDR
Republic Islands
Lebanon Lebanon Sudan Indonesia Mongolia
Lithuania Maldives Swaziland Kazakhstan Morocco
Macedonia, Mali Vanuatu Kiribati Nepal
FYR
Mauritius Mozambique Zimbabwe Kyrgyz Peru
Republic
Moldova Nigeria Liberia Rwanda
Morocco Paraguay Libya Syrian Arab
Republic
Nepal South Africa Malawi Tunisia
Philippines St. Vincent Moldova Yemen, Rep.
and the
Grenadines
South Africa Sudan Montenegro
Tanzania Suriname Niger
Turkey Swaziland Paraguay
Tajikistan Russian
Federation
Tonga Samoa
Uruguay Sri Lanka
Vanuatu St. Vincent
and the
Grenadines
Venezuela, Suriname
R.B. de
Syrian Arab
Republic
Tajikistan
Turkmenistan
Uzbekistan
Yemen, Rep.
Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: See also box 1.2, which covers metrics issues concerning some MDG targets.

and hunger. The worst results are for access
to sanitation, extreme poverty, and maternal
mortality, with access to safe drinking water
and under-five mortality in the middle.
All told, developing countries have
been doing much better than thought until
recently. Although many more develop-
ing countries are off track than on track to
achieve the targets, two thirds or more of
developing countries are actually on target
or close to being on target, thanks to more
than a decade of better policy and growth
(figure 1.4). Many countries are making sub-
stantial progress in several MDGs: gender
parity in primary education (89 of them),
gender parity in secondary education (82),
access to safe drinking water (66), primary
completion rate (55), and extreme poverty
(47). For instance, about 70 percent of devel-
oping countries have achieved or are on track
to achieve the targets for gender parity in
primary and secondary education. Although
22 THE DIVERSITY OF MDG PROGRESS GLOBAL MONITORING REPORT 2011

FIGURE 1.4 More than two-thirds of developing countries are on track or close to being on track

80
proportion of developing countries, %

89 82
70
60 47
55 66
50 25 58
40 52 53 46 48
18 38
39
30 21 36 35 37
12 30
17 25 23 27
20 19
13 15
10
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

on target close to target far from target

Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: A country is “close to the target” if its distance to getting on target (that is, its gap of trajectory) is smaller than the average gap of all lagging countries.
Otherwise, it is “far from the target” (that is, its distance is greater than the average gap). The number above each bar indicates the number of countries. See
appendix 1 for more details.

half the monitored countries (57) are off tar-
get for the primary education completion
goal, two-thirds of them (38) are very close
to being on track.
Progress is mixed or poor on access to
sanitation, maternal mortality, and child
mortality (box 1.3). Unfortunately, more
than 40 percent of low-income to upper-
middle-income countries in the sample (58
countries) are significantly off target for
access to sanitation.
Regional patterns vary. The maps in
this report show global and regional pat-
terns (see map 1.1). Because the gaps in the
top half of lagging countries are small, the
ratio of countries close to the target to the
total number of off-target countries also pro-
vides a relative measure of progress among
MDG underachievers (table A1.2 and related
tables in appendix 1). Within this group, Sub-
Saharan Africa shows encouraging results.
For instance, 81 percent of the region’s lag-
ging countries are relatively close to the
extreme poverty target. Fifty percent of the
region’s countries are very close to the target
for gender parity in secondary education, and
53 percent are quite close for hunger. Prog-
ress is also evident in access to safe drinking
water (69 percent of countries are close to the
target).
Many South Asian countries that face dif-
ficulties in reaching the 2015 targets are also
performing better than average in the off-
target group. For instance, all the region’s coun-
tries are within reach of the extreme poverty
target, and 80 percent are close to the access to
sanitation goal. For 67 percent of South Asian
countries, the hunger target is within range.
In the Middle East and North Africa, 67
percent of countries are close to the target
for gender parity in primary education. Even
more encouraging: 80 percent of countries in
the region are within reach of the primary
education goal.
In Latin America and the Caribbean,
Europe and Central Asia, and East Asia and
Pacific—the regions with better MDG perfor-
mance—most off-target countries are close to
several goals, such as hunger, primary educa-
tion completion, and gender parity. Results
are less promising for maternal mortality and
access to sanitation. Interestingly, for coun-
tries that have low poverty rates (that is, less
than 10 percent), reducing extreme poverty at
$1.25 a day to a much greater extent may not
be easy (see box 1.2).
GLOBAL MONITORING REPORT 2011
BOX 1.3 Improving children’s health through sustainable access to food, water, and
energy
Sustainable access to food, safe drinking water, basic
sanitation, and modern energy sources can decrease
child mortality significantly.a Of the estimated 10.5
million child deaths annually, the vast majority are
from preventable and treatable diseases and condi-
tions, including low dietary energy consumption
(underweight), unsafe drinking water and the lack
of basic sanitation (diarrhea), and indoor air pollu-
tion related to solid fuel use for cooking and heating
(pneumonia).
Based on socioeconomic and environmental
trends, we project the population that lacks adequate
access to food, water, and energy, and the resulting
effect on child mortality. Except for Middle East and
North Africa, progress is not enough to reach the
MDG target on child mortality; and Sub-Saharan
Africa does not even come close by 2030. Acceler-
ated progress significantly improves this situation (see
the figure below). This is especially the case in Sub-
Saharan Africa, where approximately one-third of
the child mortality gap can be achieved by achieving
other MDGs.
Rising demand for food, water, and modern
energy will put pressure on scarce natural resources
(for example, fertile land for food and bioenergy; oil
resources for clean fuels, such as kerosene for cook-
ing). This will increase the prices of (especially) food
and energy. And it will hurt poor people in import-
ing countries in Sub-Saharan Africa and South Asia
whose governments are unable to guarantee afford-
able prices when global prices increase.b Furthermore,
Projected child mortality results from various causes, 2015 and 2030
deaths per 1,000 live births
140
120
100
80
60
40
20
0
2015 2015a 2030 2015 2015a 2030
Latin America Middle East
and the Caribbean and North Africa
water supply and sanitation
Malaria
Source: PBL 2009a.
Note: Because being underweight is usually not a direct cause of a child’s death (although it increases the risks of dying from pneumonia, malaria, and diarrhea), it is
reported separately.
a. The accelerated progress scenario for 2015 achieves the MDG targets on food, water, malaria, and energy (GISMO model, PBL 2008).
THE DIVERSITY OF MDG PROGRESS 23
provision of food, water, and energy becomes more
difficult when natural resources are not properly
managed or degrade as a result of global environ-
mental change.c For example, climate change induces
changes in rainfall and temperature patterns, poten-
tially increasing the likelihood of short-term crop
failures and long-term production declines as well
as deterioration in water quality. The most vulner-
able are poor and food-insecure countries at lower
latitudes (especially in seasonally dry and tropical
regions) that largely depend on rainfed farming—
again in Sub-Saharan Africa and South Asia. Many
such pressures are slow moving and cannot easily be
stopped because of major inertia, including the pres-
sures of fertility transition and greenhouse gas accu-
mulation. They become apparent only in the long
term, after 2015 or even after 2030, trapping people
in their poverty and reversing progress.
Therefore, to achieve the MDG target on child
mortality, accelerated growth in the other MDGs is
key—particularly access to food, improved drinking
water, basic sanitation, and improved energy sources.
Furthermore, policies addressing increased access to
food, water, and energy should take global scarcities
and global environmental changes into account. This
could both help in achieving the MDGs and in mak-
ing those achievements more sustainable.
a. PBL 2009b.
b. PBL 2011.
c. PBL 2009b.
2015 2015a 2030 2015 2015a 2030 2015 2015a 2030
Sub-Saharan East Asia
Africa South Asia and Pacific
indoor air pollution child underweight
other causes MDG target
24 THE DIVERSITY OF MDG PROGRESS
Country diversity generally softens the
gloomy global picture. All these statistics are
remarkable, revealing progress that is much
more diversified and much more hopeful
than the recent pessimism about achieving
the MDGs. That pessimism was likely col-
ored by the gaps at the global level, the dif-
ficult circumstances of poor countries, the
potential negative impact of the recent global
crisis, and the lack of recent data to assess
outcomes. For example, although only 27
percent of low-income countries are on track
to achieve or have achieved the extreme pov-
erty target, almost 90 percent of these coun-
tries with data are in the top half of the lag-
ging group and, therefore, have the poverty
goal within their reach. Similarly, around 40
percent of low-income countries are close to
the primary education completion goal, even
though only 7 percent of the countries in this
income group are on target.
What the data also suggest is that the ref-
erence unit matters. Simple country averages
that give equal importance to each country
qualify the global story, which uses weighted
averages that give more importance to coun-
tries with large populations. This can work
in both directions. For example, the progress
in reducing world poverty and in meeting the
goal is essentially the result of rapid advances
by China and India, with the absolute num-
ber of poor people falling rapidly in China.
Too many countries, however, still lag on
the poverty goal, and their average shortfall
of 39 percent to be on target is the biggest
among the MDGs. In contrast, the average
distance to becoming on target for under-five
mortality is only 23 percent for lagging coun-
tries, somewhat less daunting than the global
distance derived from the population of all
under-five children.
Country analysis generally brightens the
global picture, but both global and country
perspectives are necessary for the complete
view. In an unprecedented manner, the MDGs
as global targets have galvanized development
efforts to help the world’s poor; however, the
country unit is relevant because these efforts
are still geared to individual countries, given
that country-owned strategy and capacity are
important aspects of development assistance.
GLOBAL MONITORING REPORT 2011
What important lessons therefore emerge
from the complex tapestry of progress? Why
are some countries on target, but others are
not? Of the lagging countries, why are some
close to target and others far away? The two
main drivers often cited as key to attaining
MDG-related development outcomes are eco-
nomic growth and sound policies and institu-
tions (fundamental to effective service deliv-
ery to the poor).7 Although it is easy to cite
these two drivers, it is hard to provide empiri-
cal substance to their impact on achieving the
MDGs.
We pursue this tack in the next section
by examining the country pattern against
growth and policy accomplishments, con-
tinuing the forward-looking analytical work
started in the 2010 Global Monitoring
Report.8 More specifically, we ask whether
initial conditions or subsequent growth and
policy improve the odds of reaching the goals.
The analysis looks at these elements in two
ways: using prima facie evidence from graph-
ical associations and patterns, which point
to these elements’ likely association with the
diverse progress of countries; and using a sta-
tistical investigation of their significance in
increasing the likelihood of attaining MDG-
associated outcomes.
The role of growth and policy
Initial conditions count in MDG perfor-
mance, but subsequent growth and policy
also matter greatly—or more. In most cases,
countries that are doing better (those on or
close to the target) exhibited favorable start-
ing conditions around 1990 (the reference
year). A higher per capita GDP in 1990 is
generally associated with better MDG per-
formance (figure 1.5).
Although there is no perfect indicator of
the overall quality of policy and institutions
in developing countries, the World Bank’s
annual Country Policy and Institutional
Assessment (CPIA) provides a broadly consis-
tent framework for assessing country perfor-
mance on 16 items grouped in four clusters:
economic management, structural policies,
policies for social inclusion and equity, and
public sector management and institutions.
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 25

MAP 1.1 The world is still on track to meet the poverty reduction target
IBRD 38444
APRIL 2011
Poverty rate

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Spain Turkey Armenia baijan Turkmenistan Rep. of Korea
United States Portugal Monaco Tajikistan Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola Malawi
Zambia Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
Dominican Puerto British Virgin
Poland
Poverty rate New
Zealand
Germany

Republic Rico (US) Islands (UK)

Share of population living on less than $1.25 a day
Ukraine

Anguilla (UK) Czech Rep.

U.S. Virgin Islands Antigua and Barbuda Slovak Rep.
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary
≥50
and Nevis Slovenia 25–49.9
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and 10–24.9
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino

Kosovo 2–9.9
Montenegro
Grenada FYR ≤2
Italy Macedonia
Trinidad Vatican Albania
R.B. de Venezuela
and Tobago City Greece no data

MDG performance

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Armenia Rep.
United States Portugal Spain Monaco Turkey baijan Turkmenistan
Tajikistan
of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Pakistan Bhutan
Bahrain Nepal
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
Dominican Puerto British Virgin
Poland
MDG performance New
Zealand
Germany

Republic Rico (US) Islands (UK)

MDG 1.A Halve between 1990 and 2015, the proportion
Ukraine

Anguilla (UK) Czech Rep.

U.S. Virgin Islands Antigua and Barbuda Slovak Rep. of people whose income is less than $1.25 a day
(US) Austria
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Hungary
and Nevis Slovenia on target
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia close to target
(Neth) Bosnia and
Bonaire St. Vincent and
St. Lucia San Herz. Serbia
Aruba far from target
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino This map was produced by the Map Design Unit of The World Bank.
Montenegro Kosovo no data The boundaries, colors, denominations and any other information
Grenada FYR
Italy Macedonia shown on this map do not imply, on the part of The World Bank
Trinidad Vatican Albania Group, any judgment on the legal status of any territory, or any
and Tobago City Greece
R.B. de Venezuela endorsement or acceptance of such boundaries.

Source: World Bank staff calculations based on data from the World Development Indicators database.
26 THE DIVERSITY OF MDG PROGRESS GLOBAL MONITORING REPORT 2011

FIGURE 1.5 MDG performance is stronger in countries with good initial conditions

a. Initial income conditions

7,000
6,000
GDP per capita, 1990

5,000
4,000
3,000
2,000
1,000
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

on target close to target far from target

b. Initial institutional conditions

3.60
3.40
3.20
CPIA index, 1996

3.00
2.80
2.60
2.40
2.20
2.00
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

on target close to target far from target

Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: A country is “close to the target” if its distance to getting on target (that is, its gap of trajectory) is smaller than the average gap of all lagging countries.
Otherwise, it is “far from the target” (that is, its distance is greater than the average gap).

The score is from 1 (low) to 6 (high) for each
policy that covers a wide range of issues.9
The index focuses on policies and institu-
tional arrangements—the key elements that
are within the country’s control—rather than
on actual outcomes (for example, growth
rates) that are influenced by elements outside
the country’s control. Over time, good poli-
cies and institutions are expected to lead to
favorable growth and poverty reduction out-
comes, notwithstanding possible yearly fluc-
tuations caused by external factors.10 Using
the 1996 CPIA, the earliest index with com-
parable scale and criteria available,11 suggests
that countries starting with good policies and
institutions tend to do better in the MDGs.
Starting points—inherited initial condi-
tions—explain why middle-income countries
generally do better than low-income coun-
tries. Having grown earlier, they also tend to
have implemented earlier a better set of poli-
cies and institutions. But there are variations.
For extreme poverty and gender parity in pri-
mary education, countries making the fastest
progress are those that experienced medium
poverty and female-to-male primary enroll-
ment ratios in the 1990s (see table A1.5 in the
appendix). The latter results draw attention
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 27

FIGURE 1.6 Subsequent economic growth and policy seem to matter more

a. MDG performance and growth in GPD per capita

growth in GDP per capita, 1990–2009, %

3.50
3.00
2.50
2.00
1.50
1.00
0.50
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

on target close to target far from target

b. MDG performance and recent institutional conditions

3.95

3.75
CPIA index, 2009

3.55

3.35

3.15

2.95

2.75
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

on target close to target far from target

Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: A country is “close to the target” if its distance to getting on target (that is, its gap of trajectory) is smaller than the average gap of all lagging countries.
Otherwise, it is “far from the target” (that is, its distance is greater than the average gap).

to the challenges of poverty reduction in the track to reach the targets (excluding gender
proportionate way that MDGs are defined parity in primary education) show the fast-
at low-income and middle-income levels— est per capita GDP growth over 1990–2009.
for poor countries, the distance to the goal In the same way, countries close to the target
is long; for middle-income countries, halving tend to have grown faster, in per capita terms,
already low poverty rates is not easy. than countries far from the target. Likewise, a
So, although starting points (given their strong policy and institutional framework in
inherited nature) do not say much about what the most recent year, 2009, tends to facilitate
countries can or should do, they need not pre- service delivery to the poor and to improve
ordain outcomes. The good news is that eco- MDG performance (table 1.5).
nomic growth and policy performance after Both factors—initial conditions and sub-
the initial year appear to count greatly, if not sequent growth and policy—also point to
more than the starting points (figure 1.6). On why the MDGs are such big challenges for
average, countries that have reached or are on the poorest and most fragile countries. The
28 THE DIVERSITY OF MDG PROGRESS GLOBAL MONITORING REPORT 2011

TABLE 1.5 Growth and CPIA scores are higher in countries on track or close to being on track
Average values across MDGs (weighted by the number of countries in each MDG category)
Close to Far from
On target the target the target

Average GDP per capita growth (1990–2009) 2.4 1.8 1.2

CPIA index (2009) 3.7 3.5 3.3
Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: The pairwise correlation between average GDP per capita growth and the CPIA index is 0.32 (significant at 0.01 level).
GDP per capita, purchasing power parity constant 2005 international dollars. A country is “close to the target” if its distance to
getting on target (that is, its gap of trajectory) is smaller than the average gap of all lagging countries. Otherwise, it is “far from
the target” (that is, its distance is greater than the average gap).

world’s 79 poorest countries serviced by the performance in developing countries. Coun-

World Bank’s International Development
Association (IDA) have a threshold per capita
gross national income of $1,165 for fiscal year
2011, with average per capita growth and
recent institutional performances well below
average.12 Half the IDA countries are in Sub-
Saharan Africa. With lower incomes and a
late start in policy reforms and growth, IDA
countries’ MDG performance tends to lag
that of middle-income and non-IDA countries
(figure 1.7a). Despite the greater distance to
the MDGs set by low starting points, the pov-
erty target is within reach for more than 70
percent of IDA countries as a result of more
recent economic growth and policy improve-
ment. That is also true of the hunger target for
58 percent of IDA countries. Results are also
good for gender parity in primary education.
Fragile conditions in conflict-affected
countries are also associated with very poor
MDG performance because these countries
may experience growth collapses and disas-
trous policy and institutional environments
(see box 1.4).13 In broad terms, the propor-
tion of on-target countries tends to rise with
declining state fragility (figure 1.7b). Fragility
in the graph is the index from the Center for
Global Policy, which ranges from 0 (no fra-
gility) to 25 (high fragility), divided into four
categories ranging from little to extreme fra-
gility (for more information on fragile states
and the policy toolbox, see box 5.4).14
Export sophistication and shipping con-
nectivity also have positive associations
with MDG performance. In a period of rapid
globalization and trade expansion, these two
trade dimensions tend to be related to MDG
tries with a higher level of export sophistica-
tion are generally more on track to achieve
the targets (figure 1.8a). Likewise, countries
more integrated into global shipping net-
works are more likely to be on or close to the
target (figure 1.8b).
We also looked at simpler dimensions of
trade—commodity versus noncommodity
exporters as well as landlocked versus other
countries—but the associations tend to be less
defined than those shown in figure 1.8. In any
case, export sophistication, shipping connec-
tivity, and state fragility are likely to be cor-
related with a country’s level of development,
growth performance, infrastructure, and with
its policies and institutions for trade, private
sector development, and doing business.15
Assessing the odds of achieving the
MDGs
Is it possible to link and simulate the impact
of growth and policy to the likelihood of
achieving the MDGs in a manner more rigor-
ous and statistical than with graphical asso-
ciations? Although formal econometric analy-
sis, in principle, can isolate partial effects that
are not apparent from the simple correlations
in the previous section, there are caveats: the
direction of impact between development out-
comes as measured by the MDGs and the two
basic drivers (growth and policy) can go both
ways; the two drivers themselves are likely to
be correlated; and some factors that affect the
progress of MDGs are not readily measur-
able and available. Data constraints are also
problematic. For these reasons, the fi ndings
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 29

FIGURE 1.7 MDG performance lags in IDA and fragile countries

a. IDA countries on target

100
proportion of developing countries, %

90 57
80 53
35 46
70 36
43
60
12 25
50
13 23
40 12 25 25
26
30
9 10
20 10
10 5

0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

non-IDA countries IDA countries

b. Level of fragility in countries on target

100 30
proportion of developing countries

90 24 25
by level of state fragility, %

80 20 21 18 24
7
70 8 19
14 16
60 18 18
12 13
50 9 8 8 11 13
40 5 9
8 8
30 6 6
4 5 5
20 4 4
10 1 1
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

little to low moderate serious high to extreme

Source: World Bank staff calculations based on data from the World Development Indicators database and Marshall and Cole 2010.
Note: The number above each bar indicates the number of countries. See appendix 1 for more details.

in this section are preliminary; they are spe- falling into one of the three defined categories,
cific to the approach and presentation of data linking performance to the two drivers. For a
taken; and they may not apply when using given development indicator associated with
other approaches or treatment of the MDG each MDG, the likelihood of a country being
variables. on target, close to the target, or far from the
With these caveats and building on the target is expressed as a function of
empirical patterns, previously defi ned mea-
sures of MDG progress, and the basic driv- • economic growth (annual per capita GDP
ers of progress in the GMR framework,16 we growth, 1990–2009);
introduce a simple and intuitive model that is • recent quality of the policy and institutional
suited to assessing the probability of a country framework approximated by the current
30 THE DIVERSITY OF MDG PROGRESS GLOBAL MONITORING REPORT 2011

BOX 1.4 The impact of violence on the MDGs

The World Development Report 2011: Conflict, to lack access to basic health services and safe drink-
Security, and Development depicts the arrested social ing water. Children born in these countries also tend
development in countries affected by violence. Devel- to miss out on schooling; they are twice as likely to
opment in these countries is lagging on nearly every be undernourished and nearly twice as likely to die
MDG (top figure below). before age 5 (bottom figure below).
People in fragile and confl ict-affected states are
more liable to be impoverished and malnourished and

Violence poses a major challenge to meeting the MDGs

3.5

3.0
countries not affected by violence
incidence ratio relative to

2.5

2.0

1.5

1.0

0.5

0.0
under- impoverished primary secondary infant child deaths births HIV/AIDS access to access to
nourished (not enrolled) (not enrolled) deaths under five unattended improved improved
water sanitation

fragile and conflict-affected states (FCS) recovering from fragility non-FCS (including Brazil, Russian Federation,
India, and China)

Countries affected by violence account for:

60% undernourished 60

61% impoverished 61
77% children not in
primary school 77

59% children not in

59
secondary school
70% infant deaths 70

71% child deaths under five 71

64% births unattended 64

43% persons living with

43
HIV/AIDS
65% people without access 65
to safe water
54% people without access 54
to sanitation
0 50 100
percent
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 31

FIGURE 1.8 MDG performance is better in countries with greater export sophistication and shipping connectivity

a. Level of export sophistication

2 10
100 17
proportion of developing countries, %

90 16 9
8
80
70 13
5 8 19 16 15
60 9 5 13
12 14
50 8 10 5 14
40 5 6 3 4
8 9 8 9 9
30 6 6
20 5 4
2 2
10
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

high medium-high medium-low low

b. Level of shipping connectivity

30
liner shipping connectivity index

25

20

15

10

0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

on target close to target far from target

Source: World Bank staff calculations based on data from the World Development Indicators database, Lall 2000 for export sophistication, and UNCTAD 2010 for liner shipping
connectivity.
Note: The index of export sophistication measures the technological content of exports from developing countries, standardized and distributed into four export groups. The ship-
ping connectivity index has a base year of 2004. The number above each bar indicates the number of countries. A country is “close to the target” if its distance to getting on target
(that is, its gap of trajectory) is smaller than the average gap of all lagging countries. Otherwise, it is “far from the target” (that is, its distance is greater than the average gap). See
appendix 1 for more details.

CPIA, which assesses recent changes in using the multinomial logit model. Estima-
policies and institutions and, by design, tions are performed for each of the nine
does not correlate with recent growth17; development targets under consideration
• initial conditions (per capita GDP in 1990 using “far from the target” as the reference
and CPIA index in 1996); and group or base category (see appendix 1 for a
• controls (specific development indicators technical discussion). The statistical analy-
around 1990). sis therefore pools all country information
and focuses on the probability of a country
The probability function across the differ- being in one of the three states of MDG
ent states of MDG performance is estimated performance.
32 THE DIVERSITY OF MDG PROGRESS
Most of the literature on the determi-
nants of MDGs, at country or regional
level, focuses on demand-side factors (such
as income and growth, demographic char-
acteristics, and cultural values and prefer-
ences) and on supply-side interventions (such
as public social expenditures, infrastructure,
institutional quality, and civil service perfor-
mance). Accordingly, empirical cross-country
analyses usually relate supply and demand
factors to development indicators in levels.18
In the 2010 Global Monitoring Report, the
scenarios of the impact of the recent crisis
on the MDGs also used such an approach,
and those scenarios remain generally valid.
For this report, the emphasis is shedding light
on the likelihood of countries attaining the
development goals.
The statistical probability of achiev-
ing the MDGs is positively correlated with
growth and improved policy. The correla-
tion is significant at a 10 percent or better
level of statistical significance (see figure A1.1
and marginal probabilities in the appendix).
As expected, growth and policy effectiveness
are positively related with the predicted prob-
abilities of achieving or being on track for
achieving the MDGs.
Both development drivers count, but
growth has an all-encompassing bearing on
progress toward the MDGs. A closer look
at estimation results (table A1.6 in appendix
1) reveals that economic growth has a per-
vasively significant and positive impact on
the odds of achieving all MDGs under con-
sideration, apart from gender parity in pri-
mary education. The quality of policy and
institutions also has a positive and statisti-
cally significant relation with MDGs for hun-
ger reduction, gender parity, and child and
maternal health.
Consequently, based on the average pattern
thus far and at the aggregate level, growth
might have a broader impact on attaining
MDGs than the quality of policy and insti-
tutions. This is likely because growth has a
more immediate effect and can be generated
from several sources, including better policy
as well as beneficial exogenous shocks and
flows in the global economic environment. By
GLOBAL MONITORING REPORT 2011
contrast, policy improvements as defi ned by
the CPIA cover myriad areas and interventions
that need a longer time to come through. In
any case, given the short time left until 2015,
the statistical results confi rm the centrality
of growth in improving countries’ odds of
achieving the MDGs. (In addition to growth,
reducing inequality also helps decrease pov-
erty in the case of Brazil [box 1.5]).
Improving the odds of achieving the
MDGs
How much will higher growth and better
policy improve these odds? We consider an
increase of one standard deviation in growth
and in the quality of policy institutional
assessment to be equivalent to about 1.8 per-
centage points in added growth and to the
CPIA index rising by 0.5 points.
Economic growth can jump-start coun-
tries particularly far from the goals. For
countries that are far from the target (start-
ing from a low base), the effects of a one-
standard-deviation simulated increase in per
capita growth on the probabilities of reach-
ing some MDGs tend to be distinct and large
(figure 1.9b). It would raise 12-fold the prob-
ability of reaching the targets for primary
completion and gender parity in secondary
education, more than double it for under-
five child mortality and sanitation, almost
double it for extreme poverty and hunger,
and increase it by more than half for access to
safe drinking water.
For countries close to the target, higher
growth rates still appear to have a significant
impact on primary education completion and
gender parity, but not to the same extent as
for countries far from the target (note the
scale of the y-axis in figure 1.9a). This is
doubtless because growth is already higher in
this group (see table 1.5), which likely needs
better policy to move to a higher plane.
Good policies and institutions are vital
for outcome-based MDGs. For lagging
countries far from the target, this seems true
for several health-related MDGs—under-
five mortality, maternal mortality, and hun-
ger—as well as for gender parity in primary
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 33

education. A one-standard-deviation simu- Why do policies and institutions seem to

lated improvement in the quality of policies
and institutions would increase the probabil-
ity of achieving the hunger target nearly four-
fold. For the remaining targets, the impact
ranges from 152 percent to 67 percent.
For lagging countries close to the target,
effective policies and stronger institutions
also appear important to the progress on
health-related MDGs. For instance, the odds
of reaching targets such as maternal mortality
and access to safe drinking water improve by
more than 30 percent after a one-standard-
deviation increase in the CPIA index.
play a greater role in the chances of reaching
health-related MDGs in both groups of off-
target countries? The reason is likely because
the targets are outcome-based measures that
depend not only on growth and resources
but also on myriad factors in the system: the
flow of budgets to localities where resources
are needed, accountability and transparency,
incentives of service providers and clients, and
other institutions for service delivery. If the
goals for education and gender parity were
also outcome based (for example, based on
learning outcomes or equal pay for workers

BOX 1.5 Reducing inequality and poverty in Brazil

In addition to faster growth and better policies, more developing world. According to the World Develop-
inclusive growth and equality within countries will ment Indicators database, Brazil’s Gini coefficient of
benefit people in the bottom quintiles and lift more income inequality peaked at 63.0 in 1989—the high-
people out of poverty. However, despite reduced est among 70 countries with data, just above Sierra
inequality across countries over the last 25 years, Leone’s 62.9 and Zambia’s 60.5. Since then, Brazil has
within-country inequality has generally increased experienced extraordinary progress in reducing both
in most developing countries since 1980.a Brazil is a poverty and inequality—in fact, the country’s Gini
notable exception. coefficient has fallen 10 points, while gross domestic
At the end of the 1980s, Brazil was one of the product and real household consumption have grown
most unequal countries in Latin America and the steadily since 2003, after earlier stagnation.

Reduction of income inequality has significant effects on poverty in Brazil

a. Distributional effect b. Poverty head count

18
0.5
16
% of population living on less

0.4 14
than $1.25 a day

12
kernel density

0.3 10
8
0.2
6
0.1 4
2
0 PPP $1.25 poverty line
0
0 500 1,500
89
90
92
93
95
96
97
98
99
01
02
03
04
05
06
07
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20

log of income per capita, 2005 US$ PPP

Brazil 1989a Brazil 2007
Source: World Bank staff calculations based on PovcalNet database.
a. Brazil 1989 is a projection of the structure of income distribution in 1989 with the average income in 2007.
continued
34 THE DIVERSITY OF MDG PROGRESS
BOX 1.5 Reducing inequality and poverty in Brazil (continued)
The 1990s marked the expansion of social safety
nets in Brazil. Public social expenditure, including
conditional cash transfers such as the Bolsa Família,
targeted to poor families rose from 17.6 percent of
GDP in 1990 to 26 .0 percent of GDP in 2008—an
increase of almost 50 percent in education, health,
housing, and social security. Recent evidence sug-
gests that this increase in social spending and better
targeting contributed much to reducing poverty and
inequality.b From 1994 to 2004, sound macroeco-
nomic policies also lowered inflation from high levels
and improved economic growth in more recent years.
Without the reduction in income equality from
1989 to 2007, the $1.25-a-day poverty rate would
have been 14.5 percent, instead of the 5.2 percent
attained. An additional 17.5 million Brazilians would
have remained in extreme poverty. Using regression
decomposition methods, Ferreira, Leite, and Raval-
lion calculate that without the social transfer policies
and programs, the poverty head count index in Brazil
would have been about 5 percentage points higher in
2004.c
Brazil’s encouraging results illustrate the impor-
tance of inclusive economic growth and reduction
of inequality in the fight against poverty and social
exclusion. Ravallion identifies two main lessons from
the Brazilian experience: “First, reforms to social
policies to make them more pro-poor [if fiscally pos-
sible] can play an important role in sustaining pov-
erty reduction, even during a period of economic
of similar characteristics), the results could
be similar. The lack of data and defined
goals in these areas makes it hard to test this
more systematically. (See appendix 1 for more
discussion.)
The simulation results generally show
that economic growth and policy effective-
ness can contribute significantly to achiev-
ing the MDGs. Although per capita GDP
growth tends to have a broader impact on
development targets, sound policies and
institutions—basic dimensions of effective
GLOBAL MONITORING REPORT 2011
stagnation. Second, sensible macroeconomic and
trade policies need not hurt the poor and, in the spe-
cific case of taming hyperinflation, are likely to make
a significant contribution in the fight against poverty,
even when that is not the primary objective.”d
Brazil is also taking steps to reach its indigenous
peoples. Between 2002 and 2007, the number of
indigenous schools rose by about 45 percent, and
school enrollment among indigenous populations
increased by 50.7 percent. The “Indigenous Portfo-
lio” (Carteira Indígena) Initiative implemented in
2004 has approved over 250 projects to support eco-
nomically and environmentally sustainable productive
activities for the benefit of 12,000 indigenous families
and 60 ethnic groups across 18 Brazilian states; the
participation rate by indigenous organizations and
communities is more than 80 percent.e Within-coun-
try variation and inequality being important, chapter
4 of this report examines one segment of the popu-
lation—indigenous and socially excluded groups of
people—that is lagging behind even in countries that
are already on track to achieve the poverty goal.
a. See World Bank (2007, ch. 3) for a more detailed dis-
cussion of the trends and issues of global and within-country
inequality.
b. Ferreira, Leite, and Litchfield 2008.
c. Ferreira, Leite, and Ravallion 2010.
d. Ravallion 2011, p. 17.
e. Government of Brazil 2009.
service delivery to the poor—appear crucial
for achieving health-related MDGs.
Many more developing countries can get
on track. A one-standard-deviation rise in
both growth and the CPIA would mean that
as many as 32 more developing countries
can get on track for the MDGs—an average
increase of 44 percent in the number of on-
track countries (figure 1.10). This forecast is
based on a greater than 50 percent probability
of each country getting on track. Statistically,
the probability of lagging countries can only
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 35

FIGURE 1.9 The odds of getting on target rise substantially with faster growth and better policy
Effects of a one-standard-deviation increase in selected development drivers from the multinomial logit estimates

a. Change in odds for countries close to the target

200
180
180
160 143
percentage change

140 128
120
100
80
58
60
40 34
20
0
MDG 1.c MDG 2.a MDG 3.a MDG 5.a MDG 7.c
hunger primary gender parity maternal access to
completion rate (secondary) mortality safe water

because of increase in GDP per capita growth because of increase in CPIA index

b. Change in odds for countries far from the target

1,111 1,191
500
450
400
percentage change

350
300 281
250
200 163 152
150 120
93 102
100 88
67 61
50
0
MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

because of increase in GDP per capita growth because of increase in CPIA index

Source: World Bank staff calculations. See appendix 1 for details.

Note: For simplicity of presentation, only those countries with significant percentage changes at the 0.10 level or better are shown. Marginal probabilities
and odds ratios are presented in appendix 1. Percentage variations are not comparable across indicators. Average standard deviation increase in GDP per
capita growth ≈ 1.8. Average standard deviation increase in CPIA index ≈ 0.5. GDP per capita, purchasing power parity constant 2005 international dollars.

reach 100 percent as an upper (asymptotic)
limit, but a 95 percent confidence interval of
a 50 percent increase will generally cover that
upper limit. The percentage increase in the
number of countries getting on track generally
rises most for the targets farthest behind—tar-
gets such as under-five mortality (89 percent),
hunger (64 percent), access to sanitation (54
percent), maternal mortality (37 percent), and
access to safe drinking water (36 percent). For
the other MDGs (such as poverty, primary
education completion, and gender equality
in primary and secondary education), the
increase in the number of countries is about
30 percent, still substantial. Individual coun-
tries that are good candidates to get on track
36 THE DIVERSITY OF MDG PROGRESS GLOBAL MONITORING REPORT 2011

FIGURE 1.10 Growth and policy reforms will put many countries on track

27
22
24
16
15 32
89 82 19
16 11 66
47 55
36 30 35
25

MDG 1.a MDG 1.c MDG 2.a MDG 3.a MDG 3.a MDG 4.a MDG 5.a MDG 7.c MDG 7.c
extreme hunger primary gender gender child mortality maternal access to access to
povery completion parity parity under five mortality safe water sanitation
rate (primary) (secondary)

number of countries currently on target number of additional countries becoming on target

Source: World Bank staff calculations based on a one-standard-deviation increase or improvement in growth and policy. See appendix 1 for details.

are those currently very close—that is, within
10 percent of getting on track (table 1.4).
How achievable are these gains? Recent
history suggests they may be. Achieving the
growth assumption for developing countries
appears possible. To put the one-standard-
deviation growth increase in context, per cap-
ita GDP growth will need to double from its
historical rate of 1.9 percent a year. Even so,
the historical rate is an average covering all
types of developing countries and the uneven
subperiods during 1990 –2009, including
the recent global crisis years (2008–09). The
increase, in fact, is very much within the
realm of actual performance for Sub-Saharan
African countries during periods of growth
acceleration (3.9 percent), including the high-
growth period 2000–07.19
For the two off-target groups, growth dur-
ing the recent global crisis did not fall below
the rates in the reference period (1990–2009),
corroborating other economic assessments
that low-income countries did relatively well
(table 1.6). Three factors explain why the

TABLE 1.6 A one-standard-deviation increase in growth is definitely achievable

Developing countries (GDP per capita growth rate)

Growth period Years covered on target close to the target far from the target

I. Reference period 1990–2009 2.42 1.77 1.22

II. Recent growth accelerations
Modern trend-break 1995–2007 3.46 2.61 2.01
New millennium 2000–07 3.97 2.90 2.25
Boom years 2003–07 4.82 3.65 3.07
III. Recent global economic crisis
Crisis years 2008–09 1.48 1.79 1.48
Peak crisis 2009 –1.09 0.28 0.65
IV. Growth prospects 2010–15 3.58 3.33 3.22
V. Growth assumption n.a. n.a. 3.57 3.02
Sources: World Development Indicators database. Growth prospects are from the IMF’s World Economic Outlook.World Economic Outlook.
Note: The growth assumption is growth during reference period plus one standard deviation, or 1.8. Growth rates are all simple averages,
giving equal weight to each country GDP per capita, purchasing power parity constant 2005 international dollars.
n.a. = not applicable.
GLOBAL MONITORING REPORT 2011 THE DIVERSITY OF MDG PROGRESS 37

MAP 1.2 Sub-Saharan Africa and Southern Asia are home to the vast majority of children out of school
IBRD 38446
APRIL 2011
Primary completion rate

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Tajikistan
of Korea Japan
Monaco Greece
Gibraltar (UK) Cyprus Syrian Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
Primary completion rate New
Dominican Puerto British Virgin
Poland Percentage of students completing Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep. the last year of primary school

U.S. Virgin Islands Antigua and Barbuda Slovak Rep.
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary
<49.9
and Nevis
Dominica Slovenia Romania 50–74.9
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and 75–89.9
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino 90–99.9

Montenegro Kosovo
Grenada FYR ≥100
Italy Macedonia
Trinidad Vatican Albania
R.B. de Venezuela
and Tobago City Greece no data

MDG performance

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Tajikistan of Korea Japan
Monaco Greece
Gibraltar (UK) Cyprus Syrian Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina MDG performance
New
Dominican Puerto British Virgin
Poland
MDG 2.A Ensure that by 2015, children everywhere, Zealand
Germany

Republic Rico (US) Islands (UK)

boys and girls alike, will be able to complete a full
Ukraine

Anguilla (UK) Czech Rep.

U.S. Virgin Islands Antigua and Barbuda Slovak Rep. course of primary schooling
(US) Austria
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Hungary
and Nevis Slovenia on target
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia close to target
(Neth) Bosnia and
Bonaire St. Vincent and
St. Lucia San Herz. Serbia
Aruba far from target
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino This map was produced by the Map Design Unit of The World Bank.
Montenegro Kosovo
Grenada
Italy
FYR no data The boundaries, colors, denominations and any other information
shown on this map do not imply, on the part of The World Bank
Trinidad Macedonia
and Tobago Vatican Albania Group, any judgment on the legal status of any territory, or any
R.B. de Venezuela City Greece endorsement or acceptance of such boundaries.

Source: World Bank staff calculations based on data from the World Development Indicators database.
38 THE DIVERSITY OF MDG PROGRESS
recent crisis was different for low-income
countries. First, policies and institutions
improved before the crisis, and economic
growth accelerated after the mid-1990s—
particularly after 2000. Second, unlike previ-
ous crises, the recent one was not caused by
domestic policy failure, which would have
severe impacts on human development out-
comes—particularly on child and maternal
mortality. Third, spending on social safety
nets was protected by governments with the
assistance of international fi nancial institu-
tions and the donor community.20 Even dur-
ing the peak in 2009, their average growth
stayed in positive territory. Their recovery
is now expected to be strong, with growth
prospects for 2010–15 similar to the growth
assumption (which is higher than in the refer-
ence period, but as good as the recent growth
accelerations, variously defined).
The global crisis struck the on-track
developing countries much harder. At its
peak, growth in this group was negative.
However, many of the countries are higher-
middle-income ones—particularly in Eastern
Europe, where the MDGs were less of a chal-
lenge. The growth forecast for 2010–15 is still
higher than the record in the reference period
or the recent trend-break (1995–2007).
Where a problem may surface is in improv-
ing policy and institutions, given the few
years left until 2015. A one-standard-devia-
tion improvement in the CPIA is equivalent
to a 0.5-point increase, or about the differ-
ence between the CPIA for on-target coun-
tries and for countries far from the target (see
table 1.5). A 0.5-point increase in a CPIA
rating is the normal award for an improve-
ment in any policy area in a country. But to
do this consistently for all the 16 questions in
the CPIA is much harder. In any given year,
a 0.1-point increase in the overall score rep-
resents a significant policy improvement for
a country; a 0.2- or 0.3-point increase rep-
resents a substantial policy shift or regime
change—rare for any country.
But it is certainly conceivable over time.
The World Bank’s CPIA has undergone
changes to improve its assessment and is only
GLOBAL MONITORING REPORT 2011
broadly consistent over time. For instance,
from 1998 to 2003, 32 countries (24 percent
of developing countries for which scores are
available) experienced an improvement of
0.5 points or better, especially countries in
Eastern Europe. More recently, during the
period 2004–09 when the new system has
been stable, countries that have achieved an
improvement of 0.5 include Georgia, Nigeria,
and Seychelles. As one of the few broad mea-
sures available for policy and institutions, it
is a proxy for the point that significant policy
reforms are needed, especially for outcome-
based or system-oriented MDGs. Because
policy reforms can take time to implement
and bear fruit, it is also important to under-
take significant reforms sooner than later.
What is in the rest of this report
Developing countries are doing better when
looking at country-level figures than at global
figures. Lagging countries, on average, are
very close to the targets, and their odds of get-
ting on track can improve dramatically with
stronger growth and sounder policy. Eco-
nomic growth has a pervasive effect on all the
MDGs and can jump-start countries far from
the target. The implications are clear. With
2015 only a few years away, growth in devel-
oping countries needs to be taken quickly to
a higher plane, the fastest way to lift more
countries to the MDGs. Chapter 2 examines
the prospects and challenges for economic
growth in developing countries, how they are
recovering from the recent global economic
crisis, and what they need to do to boost
growth further.
The quality of policies and institutions
is more crucial for MDGs that are health
related or are lagging the most, as well as for
countries close to the target. What constitutes
good policies and institutions in developing
countries is complex, however, covering a
wide range of areas.
Interventions can be broad and wide rang-
ing or specific to local circumstances and
problems. Much has been written about the
broad issues, but less about microeconomic
GLOBAL MONITORING REPORT 2011
interventions, precisely because of specificity
and local context. But thanks to the World
Bank’s Development Impact Evaluation Ini-
tiative and similar efforts, more documen-
tation has emerged in recent years. To help
untangle the difficult challenge of improving
policies and institutions in developing coun-
tries, chapter 3 presents findings and lessons
from impact evaluations in health and educa-
tion, where several of the studies have already
been completed.
Chapter 4 examines what countries can do
to help the bottom 10 percent of society, usu-
ally indigenous and socially excluded groups.
Because a beneficial global environment
(Goal 8) also helps support MDG progress
in developing countries, chapter 5 reviews
global trade, aid, and the actions of interna-
tional financial institutions for developing
countries. Goal 7 on environmental sustain-
ability and biodiversity has no well-defi ned
targets but it affects other MDGs, such as
child health and human development more
generally. Appendix 2 describes some aspects
based on contributions from the Netherlands
Environmental Assessment Agency.
Notes
1. World Bank 2010; Easterly 2009; Clemens,
Kenny, and Moss 2007.
2. Ravallion 2009; World Bank 2010.
3. Leo and Barmeier 2010.
4. See, for example, Bourguignon et al. (2008),
Leo and Barmeier (2010), and ODI (2010).
5. Collier and O’Connell 2006.
6. Leo and Barmeier 2010.
7. See, for example, the first Global Monitoring
Report (World Bank 2004).
8. World Bank 2010.
9. Issues include macroeconomic and fiscal pol-
icy, debt policy, trade, human development
policy in education and health, gender equal-
ity, social protection, budgetary and financial
management, and corruption in the public
sector.
10. See World Bank (2009) and footnote 17.
11. An earlier version of the CPIA goes back to
1970s but uses a different scale and criteria.
THE DIVERSITY OF MDG PROGRESS 39
For example, the assessment of governance
issues was not included in the earlier CPIA.
12. Average GDP per capita growth in IDA
countries (1990–2009) is 1.36, a point below
average growth in non-IDA countries (2.38).
The CPIA index in 2009 is, on average, 3.26
in IDA countries versus 3.69 in non-IDA
countries. Fragile or confl ict-affected coun-
tries (one or more years, 2006–09) exhibit
average per capita GDP growth (1990 –
2009) close to 1.03 percent and a CPIA
index of 3.00 in 2009. However, nonfragile
states have grown, in per capita terms, at
an average rate of 2.27 percent since 1990.
The CPIA index for these countries is 3.68
in 2009.
13. World Bank 2010. Harttgen and Klasen
(2010) show that fragile countries perform
worse on MDG levels, but that their MDG
progress is not necessarily slower.
14. Marshall and Cole 2010.
15. It is important to point out that these simple
graphical patterns can be driven by more
fundamental development factors, such as
growth and institutions. The next section
tackles some of these issues.
16. World Bank 2004.
17. A study (IDA/DECVP 2007) found the cor-
relation between contemporaneous CPIA and
growth to be weak and the correlation between
CPIA and future growth to be strong. The
CPIA measures the level of policies, not the
change; and it focuses on actual implementa-
tion, not just introduction or announcement.
It is therefore backward looking. The inclu-
sion of the 1996 CPIA is an attempt to capture
the policy achievements close to the reference
year in 1990, and the 2009 index will include
the more recent record. See appendix 1 for a
discussion of the use of the CPIA index and
other alternatives. See also the guide for CPIA
in World Bank (2009).
18. A review of the determinants of MDGs is in
chapter 3. See also Lay (2010) and Lofgren
(2010) for extensive reviews on the determi-
nants of education-related and health-related
MDG indicators.
19. See, for example, Arbache, Go, and Page
(2008).
20. See World Bank (2010).
40 THE DIVERSITY OF MDG PROGRESS
References
Arbache, J., D. Go, and J. Page. 2008. “Is Afri-
ca’s Economy at a Turning Point” In Africa at
a Turning Point? Growth, Aid and External
Shocks, ed. D. Go and J. Page, 14–86. Wash-
ington, DC: World Bank.
Bourguignon, F., A. Bénassy-Quéré, S. Dercon,
A. Estache, J. W. Gunning, R. Kanbur, S. Kla-
sen, S. Maxwell, J.P. Platteau, and A. Spadaro.
2008. “Millennium Development Goals at
Midpoint: Where Do We Stand and Where Do
We Need to Go?” European Report on Devel-
opment, European Commission, Brussels.
Clemens, M. A., C. J. Kenny, and T. J. Moss.
2007. “The Trouble with the MDGs: Con-
fronting Expectations of Aid and Development
Success.” World Development 35 (5): 735–51.
Collier, P., and S. A. O’Connell. 2006. “Oppor-
tunities and Choices.” Explaining African
Economic Growth, chapter 2 of synthesis vol-
ume. African Economic Consortium, Nairobi,
Kenya:
Easterly, W. 2009. “How the Millennium Devel-
opment Goals Are Unfair to Africa.” World
Development 37 (1): 26–35.
Ferreira, F., P. Leite, and J. Litchfield. 2008.
“The Rise and Fall of Brazilian Inequality:
1981–2004.” Macroeconomic Dynamics 12:
199–230.
Ferreira, F., P. Leite, and M. Ravallion. 2010.
“Pover t y Reduction without E conomic
Growth? Explaining Brazil’s Poverty Dynam-
ics 1985–2004.” Journal of Development Eco-
nomics 93 (1): 20–36.
Government of Brazil. 2009. “Comments of the
Government of Brazil to the report of the Spe-
cial Rapporteur on the Situation of Human
Rights and Fundamental Freedoms of Indig-
enous Peoples,” James Anaya. Presentation at
the United Nations on July 9, 2009.
Harttgen, K., and S. Klasen. 2010. “Fragility and
MDG Progress: How Useful Is the Fragility
Concept.” Working Paper 20, Robert Schu-
man Centre for Advanced Studies, European
University Institute, Florence, Italy.
IDA/DECVP (International Development Asso-
ciation and Development Economics, Office
of the Chief Economist). 2007. “Selectivity
and Performance: IDA’s Country Assessment
GLOBAL MONITORING REPORT 2011
and Development Effectiveness.” IDA 15.
Washington, DC.
Lall, S. 2000. “The Technological Structure and
Performance of Developing Country Manufac-
tured Exports, 1985–1998.” Working Paper
44. Queen Elizabeth House, University of
Oxford, Oxford, UK.
Lay, J. 2010. “MDG Achievements, Determinants
and Resource Needs: What Has Been Learnt?”
Policy Research Working Paper 5320, World
Bank, Washington, DC.
Leo, B., and J. Barmeier. 2010. “Who Are the
MDG Trailblazers? A New MDG Progress
Index.” Working Paper 222, Center for Global
Development, Washington, DC.
Lofgren, H. 2010. “What Determines the Evolu-
tion of MDG Indicators? A Selective Review
of the Literature.” Unpublished manuscript,
World Bank, Washington, DC.
Marshall, M., and B. Cole. 2010. Global Report
2009: Confl ict, Governance, and State Fra-
gility. Washington, DC: Center for Global
Policy.
ODI (Overseas Development Institute). 2010.
“Millennium Development Goals Report
Card: Measuring Progress across Countries.”
London.
PBL (Netherlands Environmental Assessment
Agency). 2008. Towards a Global Integrated
Sustainabilit y Model: GISMO 1.0 Sta-
tus Report. Report 550025002. Bilthoven:
Netherlands.
——— . 2009a. Beyond 2015: Long-Term Devel-
opment and the Millennium Development
Goals. Bilthoven, Netherlands.
———. 2009b. Growing within Limits. A Report
to the Global Assembly 2009 of the Club of
Rome. Bilthoven, Netherlands.
———. 2011. “Scarcities in a Sea of Plenty: Global
Resource Scarcities and Policies in the Euro-
pean Union and the Netherlands.” Bilthoven,
Netherlands.
Ravallion, M. 2009. “Why Don’t We See Poverty
Convergence?” Policy Research Working Paper
4974, World Bank, Washington, DC.
——— . 2011. “A Comparative Perspective on
Poverty Reduction in Brazil, China and
India.” World Bank Research Observer 26 (1):
71–104.
UNCTAD (United Nations Conference on Trade
and Development). 2010. “Liner Shipping
GLOBAL MONITORING REPORT 2011
Connectivity Index.” Division on Technology
and Logistics, Geneva, Switzerland.
Uwezo Tanzania. 2010. Are Our Children Learn-
ing? Annual Learning Assessment Report
Tanzania 2010. Dar es Salaam, Tanzania.
World Bank. 2004. Global Monitoring Report:
Policies and Actions for Achieving the Millen-
nium Development Goals and Related Out-
comes. Washington, DC.
——— . 2007. Global Economic Prospects 2007:
Managing the Next Wave of Globalization.
Washington, DC.
THE DIVERSITY OF MDG PROGRESS 41
——— . 2009. “Country Policy and Institutional
Assessments—2009 Assessment Question-
naire.” Operations Policy and Country Services.
Washington DC: World Bank.
——— . 2010. Global Monitoring Report 2010:
The MDGs after the Crisis. Washington, DC.
——— . 2011. World Development Report 2011:
Conflict, Security and Development. Wash-
ington, DC.
 2
Economic Growth in
Developing Countries

I
n chapter 1, economic growth is seen policies that softened the impact of the cri-
as critical to attaining the Millennium sis and drove a relatively rapid return to pre-
Development Goals (MDGs). Prospects crisis growth rates. To substantially reduce
for further progress on the MDGs should poverty and meet the MDGs, however, low-
be seen in light of macroeconomic develop- income and other developing countries need
ments in emerging and developing econo- to grow faster and to rebuild buffers so as
mies, and in the global economic environ- to guard against future shocks. In addition
ment they face. to strong, well-designed policies in the coun-
Economic recovery is proceeding along tries themselves, international cooperation is
two tracks. Advanced economies are expe- required to restore a global economic envi-
riencing subdued growth with high unem- ronment conducive to poverty reduction and
ployment, while many fast-growing emerg- development and to provide adequate assis-
ing economies are seeing infl ation pressures tance, with special attention to the most vul-
build amid some signs of overheating. Pro- nerable countries.
jections put annual global growth at about
4.5 percent in 2011 and 2012. But sustain-
ing the global recovery demands divergent
Economic recovery
policy responses: in the advanced economies,
Global economic activity has gathered
redressing fiscal imbalances and repairing and
pace, unevenly
reforming financial systems; in the emerging
economies, facilitating external rebalancing The World Economic Outlook of the Inter-
and checking overheating pressures, in many national Monetary Fund (IMF) estimates
cases allowing further exchange rate appre- that after contracting by 0.5 percent in 2009,
ciation, and in some, more ambitious fi scal global GDP expanded by 5.0 percent in
tightening. 2010, compared with the projection of 4.2
Good policies among low-income coun- percent a year ago (table 2.1). The recovery
tries contributed to strong growth before is markedly uneven, however, with rates
the crisis. The policy buffers established of growth in advanced market economies
then also allowed for active countercyclical several percentage points less than those in

A girl receives a tuberculosis vaccination as part of the effort to vaccinate Baluchi nomads. 43
44 ECONOMIC GROWTH IN DEVELOPING COUNTRIES GLOBAL MONITORING REPORT 2011

TABLE 2.1 Global output, 2007–14

annual percentage change
Projections

Region 2007 2008 2009 2010 2011 2012–14

World output 5.4 2.9 –0.5 5.0 4.4 4.6

Advanced economies 2.7 0.2 –3.4 3.0 2.4 2.5
Emerging and developing economies 8.8 6.1 2.7 7.3 6.5 6.6
Central and Eastern Europe 5.5 3.2 –3.6 4.2 3.7 3.9
Commonwealth of Independent States 9.0 5.3 –6.4 4.6 5.0 4.6
Developing Asia 11.4 7.7 7.2 9.5 8.4 8.5
Middle East and North Africa 6.2 5.1 1.8 3.8 4.1 4.5
Sub-Saharan Africa 7.2 5.6 2.8 5.0 5.5 5.7
Western Hemisphere 5.7 4.3 –1.7 6.1 4.7 4.0

Emerging economies 9.2 6.3 2.6 7.5 6.7 6.7

Other developing economies 7.2 6.0 5.2 6.2 6.1 6.4
Least developed countries (LDCs)a 9.0 6.9 5.2 5.3 6.1 6.4
Source: World Economic Outlook.
a. United Nations classification, a subset of developing countries.

emerging market and developing economies.1
Although below the levels existing immedi-
ately before the crisis, per capita real growth
rates in low-income countries remained posi-
tive even in the depths of the economic crisis
in 2009, and they strengthened further in
2010 (figure 2.1).
Spurred by expanding inventories and
fi xed investments, global merchandise trade
rose 13 percent in 2010, while industrial pro-
duction also rebounded. Household spending
fi rmed in many emerging market economies
FIGURE 2.1 Low-income economies’ per capita growth remained
positive in 2009, in contrast to elsewhere
6 economies. Inflation rates in emerging mar-
4
% change, median country
and in other countries with strong precrisis
fundamentals. But in many advanced mar-
ket economies, lower property values and
stubbornly high unemployment reduced
household wealth and incomes, while weak-
nesses in the fi nancial system still constrain
credit; together, these factors are restraining
consumption. Exceptional policy stimulus
helped advanced market economies achieve 3
percent growth in 2010—still a modest rate,
considering that they are emerging from a
deep recession.
Price inflation remains low in advanced
economies, where unemployment is high and
excess capacity is considerable, but is becom-
ing a policy concern in some emerging market
ket and some developing economies average

about 6 percent, reflecting rising commodity

2 prices and other factors. Most low-income
countries do not yet seem to have experienced
0
an increase in inflation.
–2

–4 Commodity prices have rebounded,

–6 leading to concerns over food price
2007 2008 2009 2010 2011 inflation
projected
emerging markets low-income countries
Together with other factors, economic recov-
advanced market economies
ery brought sharp increases in metals, food,
and other commodity prices in 2010 (figure
Sources: World Economic Outlook; IMF 2010a; IMF staff estimates. 2.2). This helped support a strong growth
GLOBAL MONITORING REPORT 2011
FIGURE 2.2 Economic recovery has taken many commodity prices sharply higher
600
500
450
index (2001Q1 = 100)
400
350
300
250
200
150
100
50
0
Q1 Q1 Q1
2001 2002 2003
Sources: World Economic Outlook; IMF staff estimates.
Note: Indexes are in U.S. dollars. Data for 2011 are projected.
rebound among low-income commodity
exporters. However, surging food prices are
again sparking concerns over the affordability
of food for the poorer segments of the popu-
lation in some low- and lower-middle-income
countries (box 2.1).2 Food price increases are
also adding to inflationary pressures in many
emerging market economies, while in parts
of Sub-Saharan Africa good harvests have
muted food price increases. With continued
economic recovery in 2011, overall commod-
ity prices may rise further—though food
price levels will depend greatly on weather
patterns during the year.
Policy challenges remain for global
financial stability, but most low-income
countries weathered the crisis well
In advanced economies, leverage is still high,
and balance sheet restructuring and regula-
tory reform are incomplete. The heightened
sensitivity of fi nancial markets to fiscal out-
looks is leading to funding pressures in some
markets. Differences in interest rates and
growth prospects have spurred strong capital
flows from advanced to emerging (and some
developing) economies.
Emerging and developing countries’
access to international financial markets has
returned broadly to precrisis levels. After an
ECONOMIC GROWTH IN DEVELOPING COUNTRIES 45
copper
fuel
all commodities
cereals
nonfuel
food
Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1
2004 2005 2006 2007 2008 2009 2010 2011
projected
uptick in mid-2010, the fall in international
bond spreads toward 2006–07 levels suggests
largely restored market access for sovereign
borrowers and investment-grade corporations
(figure 2.3). Market access for subinvestment-
grade borrowers has also been substantially
restored, though high-yield spreads remain
well above those before the crisis—even if
yields are now lower. Share prices have also
increased (figure 2.4). Bank financing has
continued to recover, notably to emerging
markets in Asia and Latin America. With
the protracted economic problems of emerg-
ing Europe, bank lending to them contracted
modestly in 2010 (figure 2.5).
Improved financial regulation and cri-
sis policy measures helped banking systems
in most emerging and developing countries
withstand the crisis well. The share of nonper-
forming loans did, however, increase some-
what further in 2010, as it did in advanced
economies (figure 2.6). Banking sectors
have also benefited from financial market
resilience, including somewhat more stable
exchange and interest rates. Even so, linger-
ing concerns about systemic risks to bank and
corporate solvency highlight the need to fur-
ther strengthen the financial supervisory and
institutional framework. To safeguard finan-
cial stability, the problems of impaired assets
need to be addressed.
46 ECONOMIC GROWTH IN DEVELOPING COUNTRIES
BOX 2.1 The global food price surge in 2010—causes and prospects
The IMF food price index has increased sharply since
the middle of 2010 and has surpassed its prereces-
sion peaks (left figure). (For the index’s definition
and methodology, see “IMF Primary Commodity
Prices” at http://www.imf.org.) Price increases have
been broad based and led by a surge in grain prices
by 80 percent. Prices of key grains, including corn
and wheat, have risen sharply to close to their 2008
peaks. For more income-elastic food groups, such as
vegetable oils, meat, and seafood, prices are pushing
past previous highs (right figure).
The catalyst for the recent food price rise has been
a series of weather-related supply shocks to major
grains. Wheat prices were the fi rst to surge, as the
improving supply picture reversed sharply in mid-
2010. Drought and wild fi res in the Russian Federa-
tion and Kazakhstan and heavy rain in Ukraine led
to significant downward revisions in global produc-
tion estimates. Corn prices began to rise as estimates
of the 2010/11 U.S. harvest were progressively down-
graded because of adverse weather during the sum-
mer months.
La Niña has contributed to adverse weather con-
ditions around the Pacific Rim. Recent satellite evi-
dence indicates that this is among the most intense
La Niña episodes of the last 50 years and that its
effects are likely to be close to their peak during
the southern hemisphere summer. This has already
affected rice harvests across Asia and food products
typically not traded globally, such as local fruits and
vegetables.
While supply has disappointed, demand for major
food crops has remained robust, largely reflecting
growth in emerging economies but also demand
for biofuel feedstock. Many important food items
are relatively income inelastic, but previous global
IMF food price index, 2005–11a
190
170
150
130
index
110
90
70
50
2005 2006 2007 2008 2009
Source: International Monetary Fund.
a. U.S. dollar price index rebased at 2005 = 100. Data for 2011 are current as of February 2011.
GLOBAL MONITORING REPORT 2011
recessions have been associated with lower demand
growth. During the most recent recession, how-
ever, demand growth remained steady and has now
risen to around 2.5 percent a year for the major
crops. China and other emerging market economies
account for 70–80 percent of demand growth dur-
ing the past three years. The U.S. corn ethanol sector
has rebounded from the 2008–09 crisis. Almost 40
percent of the 2010 U.S. corn crop is estimated to
have been used as ethanol feedstock, an increase of 5
percentage points over the previous year.
Low global inventories and trade restrictions
have exacerbated the price response to supply disap-
pointments in recent quarters. Global food invento-
ries were run down to very low levels in 2002–08
as demand picked up and the global supply response
lagged. That response has now begun, most evident
in the increase in acreage harvested; but stocks will
likely only recover gradually. The imposition and
extension of grain export restrictions by Russia and
Ukraine in 2010 added to price volatility.
Output should recover quickly from recent sup-
ply shocks, and increased global acreage indicates
that more normal weather conditions will bring large
harvests in 2011. Weather-related supply shortfalls
tend to be followed by sharp recoveries in output for
many major crops, including wheat. This would ease
market tightness and allow prices to decline modestly
over the next 12 months, although they will remain
high compared with 10 –15-year averages. One
important risk is that the La Niña weather pattern
may adversely affect southern hemisphere harvests.
More generally, food markets will remain vulner-
able to more widespread supply shocks for as long as
inventories are low. (See also related discussion in the
trade section of chapter 5.)
IMF food price index groups, 2005–11a
300
250
200
index
150
100
50
0
2010 Jan 2005 2006 2007 2008 2009 2010 Jan
2011 2011
cereals meat
seafood vegetable oils
GLOBAL MONITORING REPORT 2011 ECONOMIC GROWTH IN DEVELOPING COUNTRIES 47

FIGURE 2.3 Bond spreads and international bond issuance are virtually back to precrisis levels in
emerging and developing countries

70 1,000
60 900
800

spreads, basis points

50 700
US$, billions

40 600
500
30 400
20 300
200
10
100
0 0
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
EMBI global (right axis) issues of international bonds (left axis)

Sources: Dealogic; Bloomberg; IMF staff estimates.

FIGURE 2.4 Share prices, too, have bounced back

900
800
index (Jan 2000 = 100)

700
600
500
400
300
200
100
0
Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Apr Sep Feb Jul Dec May Oct Mar Aug Jan Jun Nov Jan
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
emerging markets developing countries

Sources: International Financial Statistics; IMF staff estimates.

Note: Prices are presented in local currency.

FIGURE 2.5 Emerging market bank financing continues to recover

20
% change from previous quarter

15
10
5
0
–5
–10
–15
–20
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2007 2008 2009 2010
Asia Emerging Europe Latin America Middle East/Africa

Sources: Bank for International Settlements; IMF staff estimates.

Note: Liabilities to BIS-reporting banks, adjusted for exchange rate changes. Changes are calculated as flow adjusted for exchange rate changes as a share of
the stock in the previous quarter.
48 ECONOMIC GROWTH IN DEVELOPING COUNTRIES GLOBAL MONITORING REPORT 2011

FIGURE 2.6 Nonperforming loans in emerging and developing reserves; the size of their current account
countries, 2003–10 surpluses did not fall and may have widened
somewhat. After large swings in 2009, terms-
12 of-trade changes in 2010 seem to have been
10
relatively benign (figure 2.8). In emerging and
low-income countries in 2010, levels of official
share of total loans, %

8 reserves roughly kept pace with the rebound in

6
4 economies, increasing somewhat relative to
2
0 mainly through export demand, foreign direct
2003–07 2008
emerging markets developing countries
advanced economies
Sources: Global Financial Stability Report; IMF staff estimates.
Trade and capital flows have bounced
back, into a changed picture
Globally, current account imbalances wid-
ened in 2010 after narrowing considerably
in 2009 in the midst of the crisis (figure 2.7).
They remain below the levels of 2004–08. A
number of emerging market economies that
experienced renewed surges in capital inflows
in 2010 accumulated more foreign exchange
trade, with only modest declines in the median
ratio of reserves to imports and, for emerging
short-term external debt (figure 2.9).3
The crisis affected low-income countries
2009 2010
investment (FDI), and remittances, more than
global interest rates or the terms of trade.4
Exports from low-income countries contracted
very sharply in late 2008 and early 2009. Crit-
ically, though, relative to previous crises, these
countries had entered this crisis with lower
external debt, narrower fiscal and current
account deficits, and higher external reserves
(figure 2.10). (See also chapter 1, regarding
growth and these countries’ progress toward
reaching the MDGs.) These proved to be
important policy buffers that could be drawn
upon to help cushion the shock (see lower
external debt, narrower fiscal and current
account deficits, and higher external reserves
below). By late 2010, monthly exports to the

FIGURE 2.7 Global current account imbalances, 2000–11

3.5

2.5
1.5
% of world GDP

0.5

–0.5

–1.5

–2.5
–3.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011a

low-income countries with surplus United States emerging markets with deficit
emerging markets with surplus other advanced countries with deficit low-income countries with deficit
other advanced countries with surplus

Sources: World Economic Outlook; IMF staff estimates.

Note: The global statistical discrepancy is not shown.
a. projected.
GLOBAL MONITORING REPORT 2011 ECONOMIC GROWTH IN DEVELOPING COUNTRIES 49

FIGURE 2.8 Annual changes in terms of trade, by quintile group

35
30
25
20
15
% change

10
5
0
–5
–10
–15
–20
2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011
lowest quintile countries highest quintile countries all countries

Sources: World Economic Outlook; IMF staff estimates.

Note: Quintile groups are based on the average (mean) of terms-of-trade changes in 2009 and 2010.

FIGURE 2.9 Reserve levels broadly kept pace with the rebound in trade

a. Reserves, in months of exports b. Reserves, in terms of the stock of

external short-term debta
10 2.5
9
8 2.0
7
6 1.5
months

index

5
4 1.0
3
2 0.5
1
0 0.0
2006 2007 2008 2009 2010 2006 2007 2008 2009 2010
emerging economies developing countries emerging economies
median, emerging median, developing
economies countries

Sources: World Economic Outlook; IMF staff estimates. Sources: World Economic Outlook; IMF staff estimates.
Note: Bars represent the range between the 25th and 75th percentiles. a. The median ratio is shown. Stock of short-term external debt
includes amortization paid to official creditors.

Group of Twenty (G-20) countries approached developing countries is mixed. In aggregate,

their peak precrisis levels—but with interest- there was a sharp recovery in trade credit
ing compositional shifts (box 2.2). and strengthening in portfolio equity and
Despite important signs of a recovery in bond flows in 2010, and modest increases
financial flows, the picture for emerging and in FDI flows.5 However, (simple average) net
50 ECONOMIC GROWTH IN DEVELOPING COUNTRIES GLOBAL MONITORING REPORT 2011

FIGURE 2.10 Low-income countries’ precrisis macroeconomic policy buffers were stronger than in
earlier years

6 45
40
5
35
4 30

percent
25
3
20
2 15
10
1
5
0 0
current account deficit fiscal deficit/GDP reserve coverage inflation external public
adjusted for FDI/GDP (percent, left axis) (months of imports, (right axis) debt/GDP
(percent, left axis) left axis) (right axis)
previous crises 2005–07

Sources: World Economic Outlook; IMF staff estimates.

BOX 2.2 Low-income-country exports during the exit from the crisis: early evidence

Exports from low-income to G-20 countries recov- Direction of trade

ered steadily in 2010, after a sharp fall in the second
Of total low-income-country exports to G-20 coun-
half of 2008 and early 2009. a Using three-month
tries, about two-thirds go to advanced market econo-
moving averages (non-seasonally adjusted), their
mies and one-third goes to emerging market econo-
exports grew from US$15 billion in January 2007 to
mies (figure below, right).b But low-income-country
US$25 billion in August 2008, fell to US$13 billion
exports to emerging market economies were growing
a month in early 2009, then reached US$22 billion
more quickly before the crisis, fell less abruptly during
in October 2010 (figure below, left).
the crisis, and in 2010 accounted for more than 40 per-
cent of their export growth. Among exports to emerg-
Low-income country exports, by destination ing market economies, however, China accounted for
28 about one-third prior to the crisis, but nearly half by
late 2010. While China accounted for about one-sixth
24
of low-income-country export growth in the precrisis
US$, billions

20 period, it accounted for one-quarter in 2010.

16
12 Contribution to export growth, by destination
40
8 29.6 31.5
30
4 19.4 18.6
20
0 10 4.4 5.8
7.4 5.5
percent

Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
2007 2008 2009 2010 0
–2.2
–10 –4.8
advanced and emerging market economies, including China
advanced and emerging market economies, excluding China –20
advanced market economies –21.2
–30 –28.1
Sources: Global Trade Atlas; IMF staff estimates. –40
Note: Based on three-month backward moving averages of imports reported by 2008 2009 2010
Argentina, Australia, Brazil, Canada, China, EU-27, India (estimated for July–October
2010), Indonesia, Japan, Republic of Korea, Mexico, Russian Federation, South China emerging markets
Africa, Turkey, and the United States; advanced market economies total

Sources: Global Trade Atlas; and IMF staff estimates.

GLOBAL MONITORING REPORT 2011 ECONOMIC GROWTH IN DEVELOPING COUNTRIES 51

BOX 2.2 (continued)

Product composition Contribution to export growth, by product type

40
Minerals constituted about two thirds of low-income- 30
29.6 31.5
22.2
country exports prior to the crisis, followed by light 20 18.8
manufactures such as textiles and clothing (fi gure 10

percent
5.9 3.8
below and at top right).c Exports of other (“heavy”) 0
1.6 1.5 3.0 1.4 2.2 0.8
manufactures were under 10 percent before the crisis –1.5 –1.7 –0.2 –0.4
–
–10
but close to 15 percent by end-2010 (figure at bottom –20
right). Minerals exports were the source of the great- –30 –24.3
–28.1
est changes in exports and remain the largest export –40
category. They accounted for three-quarters of pre- 2008 2009 2010
crisis low-income-country export growth (mainly others heavy manufacturing light manufacturing
fuel exports by oil exporters), but were also highly minerals agriculture total
vulnerable in the downturn—nearly 90 percent of the Sources: Global Trade Atlas; IMF staff estimates.
export contraction in 2009 was in minerals. Miner-
als exports remained the largest export item with the
highest contribution to export growth in the postcri- Low-income country exports: heavy manufacturing
3.0
sis period: in 2010, about two-thirds of low-income- 2.5
country export growth was in mineral products.
US$, billions

2.0
Interestingly, the exit from the crisis is also see-
1.5
ing increased exports of heavy manufactures. These
1.0
rose from March 2009, driven by exports to China.
This reflects exports of chemical products, plastics, 0.5
rubber, and metal products, mainly from Asian low- 0.0
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
income-countries. 2007 2008 2009 2010
Aggregate low-income-country exports will advanced and emerging market economies, including China
remain sensitive to demand for minerals and other advanced and emerging market economies, excluding China
advanced market economies
commodities, an area where continued strong
growth in emerging markets will be important. But Sources: Global Trade Atlas; IMF staff estimates.
Note: Based on three-month backward moving averages of imports reported
there is also tentative evidence that emerging market by Argentina, Australia, Brazil, Canada, China, EU-27, India (estimated for July–
growth may be helping some low-income countries October 2010), Indonesia, Japan, Republic of Korea, Mexico, Russian Federation,
diversify their export composition. South Africa, Turkey, and the United States.

a. The analysis in this box is based on detailed bilateral

Low-income country exports, by product type monthly trade statistics provided for 19 of the G-20 countries
28 under subscription by the Global Trade Information Service’s
24 Global Trade Atlas.
20 b. Countries are classifi ed as follows: advanced markets
US$, billions

refer to 32 countries included in World Economic Outlook

16
classification 110; low-income countries refer to 71 countries
12
eligible for the Poverty Reduction and Growth Trust; and
8 emerging markets refer to all the countries in the sample that
6 are neither advanced markets nor low-income countries.
4 c. Products are classified as follows: agriculture (HS codes
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 01– 05 [animal and animal products] and 06–15 [vegetable
2007 2008 2009 2010 products]), minerals (25–27 [mineral products]); light manu-
agriculture heavy manufacturing minerals factures (16–24 [foodstuffs], 50 – 63 [textiles], and 64 – 67
others light manufacturing [foot wear/headgear]); heavy manufactures (28–38 [chemicals
Sources: Global Trade Atlas; IMF staff estimates.
and allied industries], 39–40 [plastics/rubbers], 72–83 [met-
Note: Based on three-month backward moving averages of imports reported als], 84–85 [machinery/electrical], and 86–89 [transporta-
by Argentina, Australia, Brazil, Canada, China, EU-27, India (estimated for July– tion]); and others.
October 2010), Indonesia, Japan, Republic of Korea, Mexico, Russian Federa-
tion, South Africa, Turkey, and the United States.
52 ECONOMIC GROWTH IN DEVELOPING COUNTRIES GLOBAL MONITORING REPORT 2011

TABLE 2.2 Net financial flows

percent of GDP
Flows 2007 2008 2009 2010 2011 projection

Emerging market economies 12.0 10.4 8.1 8.0 7.9

Private capital flows, net 8.9 6.4 1.7 1.9 2.7
of which: private direct investment 5.3 4.8 3.5 3.3 3.0
private portfolio flows 1.2 –0.9 –0.9 0.5 0.2
Private current transfers 4.3 4.0 3.9 3.8 3.6
Official capital flows and transfers (net) –1.2 0.0 2.4 2.3 1.6
Memorandum item:
Reserve assets –3.9 –1.7 –2.4 –2.0 –1.7

Developing countries 13.9 13.2 11.7 10.5 13.2

Private capital flows, net 3.4 1.6 0.8 –0.1 0.6
of which: private direct investment 7.0 6.6 5.4 5.6 5.8
private portfolio flows –1.9 –1.6 –1.6 –1.5 –1.3
Private current transfers 3.9 3.9 3.9 4.1 4.1
Official capital flows and transfers (net) 6.5 7.7 7.0 6.5 8.5
Memorandum item:
Reserve assets –4.3 –2.3 –3.4 –2.9 –3.5

Least developed countriesa 12.9 10.5 8.2 9.3 11.8

Private capital flows, net –0.5 –4.3 –3.6 –3.2 –4.1
of which: private direct investment 6.1 5.8 4.6 5.3 5.4
private portfolio flows –2.5 –2.4 –2.6 –2.5 –2.4
Private current transfers 1.9 2.0 2.2 2.5 2.3
Official capital flows and transfers (net) 11.4 12.9 9.6 10.0 13.5
Memorandum item:
Reserve assets –4.3 –2.2 –5.0 –4.5 –4.8

Fragile statesb 14.7 6.2 0.1 1.8 10.3

Private capital flows, net –1.5 –7.4 –8.8 –8.7 –6.4
of which: private direct investment 6.1 5.7 3.7 4.5 5.4
private portfolio flows –1.2 –0.9 –0.9 –1.4 –1.8
Private current transfers 1.9 1.7 2.4 3.1 3.0
Official capital flows and transfers (net) 14.3 12.0 6.5 7.5 13.7
Memorandum item:
Reserve assets –4.3 –2.8 –7.6 –7.0 –9.9
Sources: World Economic Outlook; IMF staff estimates.
Note: Unweighted simple averages.
a. United Nations classification, a subset of developing countries.
b. World Bank classification, a subset of emerging and developing countries.

financial inflows, expressed relative to GDP, Twin-track macroeconomic policies

actually fell farther in 2010—suggesting that
many recipient countries may not yet be shar-
ing in these increases (table 2.2). Net fi nan-
cial flows to developing countries in 2011 are
projected to reach 13 percent of GDP, near
the average for 2007–08.
Inflows of FDI are lagging other signs
of recovery, both in emerging market and
developing countries (table 2.2), 6although
increases in workers’ remittances to precrisis
levels have partly offset this (table 2.3).7
reflect the uneven economic recovery
In advanced and some emerging market
economies, as the impact of fi scal stimulus
wanes and active fiscal adjustment begins,
highly supportive monetary policy remains
important for a more vigorous recovery. But
policy makers must address the social costs
of continued high unemployment (including
high youth unemployment in some countries)
at the same time.8 Most emerging economies
GLOBAL MONITORING REPORT 2011 ECONOMIC GROWTH IN DEVELOPING COUNTRIES 53

TABLE 2.3 Inflows of international remittances

US$, billions
2003–07 2008 2009 2010 2011
Source of inflows annual average annual annual estimate projections

Emerging market economies 150.2 233.2 224.1 238.3 252.5

Developing countries 28.9 55.4 53.1 56.8 60.9
Least-developed countriesa 12.8 22.9 24.2 25.9 27.9
Fragile statesb 9.0 15.6 14.2 15.7 17.0
Sources: World Bank; IMF staff estimates.
Note: Remittances include workers’ remittances, compensation of employees, and migrant transfers.
a. United Nations classification, a subset of developing countries.
b. World Bank classification, a subset of emerging and developing countries.

face different challenges, including incipient Continued accommodative monetary

inflationary pressures and, often, a need to
rebalance growth toward domestic sources.
Accordingly, among developing countries
and particularly among emerging market
economies, the macroeconomic policy mix
shifted notably in 2010. Following the com-
bined monetary and fiscal loosening by most
emerging market economies in the face of
contracting global output in 2009, one-third
undertook both monetary and fiscal tighten-
ing in 2010 (figure 2.11). As global conditions
improved, developing countries also began to
reverse their countercyclical policies.
policy in most advanced economies has been
critical to alleviating the fi nancial crisis and
recession. In contrast, monetary conditions
in most emerging and developing countries
began to normalize in 2010, but remained
too accommodative in many cases. While
some 80 percent of emerging market econo-
mies undertook monetary policy loosen-
ing in 2009, only about one-third did so in
2010. Many developing countries continued
with some monetary loosening (figure 2.12).
Resumed strong growth in emerging market
economies underpinned declining measures of

FIGURE 2.11 Macroeconomic policy responses to the crisis vary

a. Emerging markets b. Developing countries

75 75

60 60

45 45
percent

percent

30 30

15 15

0 0
monetary monetary monetary fiscal loosening monetary monetary monetary fiscal loosening
and fiscal and fiscal loosening and monetary and fiscal and fiscal loosening and monetary
loosening tightening and fiscal tightening loosening tightening and fiscal tightening
tightening tightening
2008 2009 2010 2008 2009 2010

Sources: International Financial Statistics; IMF staff estimates.

Note: Fiscal conditions are defined based on annual change in government balance as a percent of GDP in 2008, 2009, and 2010. Monetary conditions are
based on the change in the monetary conditions index; changes are calculated Q4 over Q4, except for 2010, which uses Q3. The monetary conditions index
is a linear combination of nominal short-term interest rate and the nominal effective exchange rate (with a one-third weight for the latter).
54 ECONOMIC GROWTH IN DEVELOPING COUNTRIES GLOBAL MONITORING REPORT 2011

FIGURE 2.12 Monetary policy loosening

a. Emerging markets with monetary b. Developing countries with monetary

policy loosening policy loosening
80 80
70 70
60 60
50 50
percent

percent
40 40
30 30
20 20
10 10
0 0
MCI discount rate exchange rate MCI discount rate exchange rate
2008 2009 2010 2008 2009 2010

Sources: World Economic Outlook; IMF staff estimates.

Note: MCI = monetary conditions index. Monetary policy loosening is based on MCI calculations. MCI is a linear combination of nominal short-term interest
rate and the nominal effective exchange rate (with a one-third weight for the latter).

FIGURE 2.13 Average year-on-year growth in money and the money gap in emerging market economies

25

20

15 M2
percent

10

5
money
gap
0

–5
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q4
2003 2004 2005 2006 2007 2008 2009 2010

Sources: International Financial Statistics; IMF staff estimates.

Note: The money gap is the difference between year-on-year growth rates of the monetary aggregate M2 and nominal GDP. The sample includes emerging
market economies that have data on both for the whole sample period shown.

excess liquidity (such as growth of the money
supply relative to nominal GDP), even as
monetary aggregates expanded (figure 2.13).
Fiscal policy has begun to shift from sup-
porting recovery to cutting deficits.9 The aver-
age deficit among advanced economies fell by
about 1 percentage point of GDP in 2010. But
because this mainly reflected better growth
and reduced fi nancial sector support rather
than narrower cyclically adjusted balances,
the need remains for robust, specific fiscal
consolidation plans. Among major emerging
market economies, deficits fell modestly
and cyclically adjusted deficits were broadly
unchanged, suggesting that easy credit con-
ditions may be discouraging the more rapid
consolidation that could help dampen cur-
rency appreciation and inflationary pressures
(figure 2.14).10
Low-income countries have also begun to
reverse the unprecedented countercyclical fis-
cal response that helped soften the impact of
the crisis. As in past downturns, fiscal rev-
enue declined during the crisis. This time,
GLOBAL MONITORING REPORT 2011 ECONOMIC GROWTH IN DEVELOPING COUNTRIES 55

FIGURE 2.14 Fiscal deficit, 2008–11 FIGURE 2.15 Low-income countries: fiscal
balances and economic crises
0
0
–1
–1
–2
% of GDP

% of GDP
–2
–3
–3
–4
–4
–5
2008 2009 2010 2011 projected –5
T–1 crisis year (T) T+1
Sources: World Economic Outlook; IMF staff estimates. 2009 crisis 1991 crisis 1982 crisis
Note: General government balance data from World Economic Outlook
based on Government Finance Statistics Manual 2001 definitions of fiscal
balance. Sources: World Economic Outlook; IMF 2010a; IMF staff estimates.

however, most of these countries did not The quality of low-income-country

curtail spending—indeed, about half of them macroeconomic policies in 2010 was
accelerated growth of real primary expen- broadly in line with that in recent years
ditures in 2009, undertaking a vigorous
countercyclical fiscal response that required Monetary policy, fiscal policy, access to for-
additional fi nancing (figure 2.15).11 As rev- eign exchange, and the consistency of macro-
enues grew in 2010, fi scal deficits declined economic policies are areas that IMF country
by about 1 percentage point of GDP (more desks judged strong in most countries in 2010
among Asian low-income countries), and (figure 2.17).12 Expenditure composition and
low-income countries began to rebuild policy public sector governance are seen as areas of
buffers, even as they broadly sustained rates relative weakness. Whether the result of an
of expenditure growth (figure 2.16). actual deterioration or because the global

FIGURE 2.16 Real primary expenditure in low-income countries has increased in favor of public
investment and social sectors

a. Real primary expenditurea b. Real growth rate of primary expenditureb

130 18

125 15
index, 2007 = 100

120 12
percent

115 9

110 6

105 3

100 0
2007 2008 2009 2010 primary education and capital
low-income countries emerging economies expenditure health
advanced market economies 2006–08 2009

Sources: World Economic Outlook; IMF 2010a; IMF staff estimates.

a. Median.
b. Median.
56 ECONOMIC GROWTH IN DEVELOPING COUNTRIES GLOBAL MONITORING REPORT 2011

FIGURE 2.17 Macroeconomic policy quality in low-income countries remained little changed

a. Fiscal policy b. Composition of public spending

90 90
80 80
70 70
in each category

in each category
% of countries

% of countries
60 60
50 50
40 40
30 30
20 20
10 10
0 0
unsatisfactory adequate good unsatisfactory adequate good

c. Fiscal transparencya d. Monetary policy

90 90
80 80
70 70
in each category

in each category
% of countries

% of countries
60 60
50 50
40 40
30 30
20 20
10 10
0 0
unsatisfactory adequate good unsatisfactory adequate good

e. Consistency of macroeconomic policy f. Governance in monetary and financial institutions

90 90
80 80
70 70
in each category

in each category
% of countries

% of countries

60 60
50 50
40 40
30 30
20 20
10 10
0 0
unsatisfactory adequate good unsatisfactory adequate good

g. Governance in the public sector h. Access to foreign exchange

90 90
80 80
70 70
in each category

in each category
% of countries

% of countries

60 60
50 50
40 40
30 30
20 20
10 10
0 0
unsatisfactory adequate good unsatisfactory adequate good

2003 2008 2009 2010

Source: IMF staff estimates.

a. Available from 2005.
GLOBAL MONITORING REPORT 2011
crisis has enhanced awareness of the inher-
ent risks, IMF teams appear to have become
more concerned with the adequacy of low-in-
come countries’ financial sector governance.
Exiting from the crisis: achieving
sustainable growth
Meeting the policy challenges in
emerging market economies
Despite their impressive growth and declin-
ing poverty rates, emerging market econo-
mies remain home to many of the world’s
poor people. A continued strong and stable
economic performance, complemented by
targeted poverty-reduction policies, will help
these countries meet the MDGs. In addition,
as these economies have become important
trade and fi nancial partners for low-income
countries, this performance will also contrib-
ute to those countries’ MDG progress.
Fiscal balances improved in most emerg-
ing market economies in 2010, driven in part
by higher growth. Their overall budget def-
icit in 2010 is projected at about 4 percent
of GDP (around 0.75 percent of GDP lower
than in 2009), in some cases partly the result
of one-off receipts. Cyclically adjusted bal-
ances in the six largest economies were only
marginally tighter in 2010, but an adjustment
of around 0.5 percent of GDP is expected in
2011. Government debt rose during the crisis
(especially in emerging Europe), but on aver-
age remains at less than 40 percent of GDP
(below the average in advanced economies).
The policy challenges of the emerging
economies involve overheating and strong
capital inflows—issues quite different from
those of other countries. (The advanced
market economies, for example, must for-
mulate and implement detailed fiscal con-
solidation plans to avoid unsustainable fis-
cal situations, even while they face sluggish
growth and job creation.) For these econo-
mies, growth is generally strong and debt is
manageable,13 although many are at risk of
overheating pressures associated with rapid
credit growth, infl ation, and possible asset
ECONOMIC GROWTH IN DEVELOPING COUNTRIES 57
price bubbles. Robust domestic demand and
the recovery of global output are leading to a
rapid closure of output gaps, even as food and
commodity prices have returned to precrisis
peaks.14 Inflationary expectations are rising
and policy targets have been exceeded in a
number of Asian and Latin American coun-
tries. Infl ationary pressures could threaten
some otherwise sound policy frameworks,
but some countries’ concerns about further
currency appreciation are slowing their mon-
etary policy responses. Strong capital inflows
that exacerbate overheating pressures are
complicating the policy response.
Timid policy responses to overheating
would pose risks to the real economy and
could derail growth prospects, especially in
the large economies. Inadequate responses
to large capital inflows could result in asset
price overvaluations and an increased risk of
a hard landing in credit and property mar-
kets, possibly triggering broader macroeco-
nomic and financial instability (box 2.3). To
lower risks of a hard landing, many emerging
economies will need to tighten policies. This
may include a further removal of monetary
accommodation, further macroeconomic
prudential tightening, and, often, exchange
rate appreciation. Some will also need to
tighten fiscal policies.
Tackling obstacles to growth in
low-income countries
The crisis has set back progress toward the
MDGs in many low-income countries, after
an extended period of strong economic
growth that had made substantial inroads
into poverty. Although growth has since
picked up and poverty rates are falling again,
recovery at the projected pace will not make
up the progress lost because of the crisis. To
regain momentum, action is needed to boost
growth, emphasizing growth patterns that
benefit subnational regions and sectors where
poor people are most numerous—and push-
ing ambitious microeconomic and sectoral
reforms to promote access to social services
and basic infrastructure.15 Economic growth
58 ECONOMIC GROWTH IN DEVELOPING COUNTRIES
BOX 2.3 Emerging market capital inflows: experience and challenges
Capital flows to emerging market economies have
rebounded with the ebbing of the global financial cri-
sis. The largest recipients are Asian and Latin Ameri-
can emerging market economies, South Africa, and
Turkey. In several countries, net inflows are close to
all-time highs; on a gross basis, however, total inflows
to emerging markets have yet to reach their precri-
sis peak. Compared with other waves of inflows, the
current episode is characterized by a predominance of
volatile portfolio inflows. Gross inflows have reached
6 percent of GDP in only three quarters since the
postcrisis trough; it took three years to reach a similar
magnitude in the surge that preceded the global crisis.
Portfolio inflows account, on average, for almost one-
half of inflows (Brazil and the Republic of Korea are
the top two recipients), much more than in the previ-
ous wave. Direct investment and cross-border bank
lending are less predominant this time, reflecting lag-
ging economic performance and impaired fi nancial
intermediation in advanced market economies.
The main pull and push factors behind the recent
acceleration of capital flows from advanced to emerg-
ing economies are improved fundamentals and
growth prospects in emerging market economies
and loose monetary policy in advanced economies.
From a structural perspective, the global crisis and
the more recent jitters in Europe have exposed bal-
ance sheet vulnerabilities in advanced economies and
appear to have triggered a gradual shift in the portfo-
lio allocation of institutional investors toward emerg-
ing market economies, many of which are enjoying
low debt, proven resilience to shocks, and improved
ratings. From a cyclical perspective, the two-speed
nature of the ongoing global recovery will likely keep
interest rate differentials between emerging market
and advanced economies wide for a prolonged period.
Surging commodity prices are an additional cyclical
force pushing capital toward commodity exporters,
such as Brazil and Peru. In relative terms, more-liquid
emerging markets are attracting larger inflows. All
things considered, the stage seems set for the ongo-
ing wave of inflows to be both large and persistent,
bringing important investment and growth benefits to
emerging market economies. However, inflows have
tended to reverse suddenly and in a synchronized
manner in the past, causing sharp currency deprecia-
tion and severe balance sheet dislocations. Emerging
GLOBAL MONITORING REPORT 2011
market economies therefore face the challenge of
absorbing the benefits of capital inflows while limit-
ing the attendant macroeconomic and financial stabil-
ity risks.
A close look at selected countries that have received
large capital inflows provides useful insights regarding
the effects of and policy responses to the recent epi-
sode of inflows (see the figure on the next page). These
countries are facing large capital inflows mainly in the
form of long-term portfolio debt flows, although com-
modity exporters also continue to enjoy large direct
investment inflows. Despite significant accumula-
tion of international reserves, real exchange rates in
most cases have appreciated back to precrisis levels—
although the degree of nominal appreciation has been
less pronounced and more varied across countries.
Surging portfolio inflows helped propel stock and
bond prices especially in countries with shallower cap-
ital markets. While there are limited signs of bubbles
so far, cyclical pressures are emerging, with credit to
the private sector picking up strongly in some cases.
Macroeconomic policy responses to the current
inflow episode have varied. On the monetary policy
side, most countries have begun clawing back the
easier monetary policy stance adopted during the
global crisis. That said, countries have refrained from
tightening aggressively, despite emerging inflationary
pressures, out of fear that tightening would pull in
more capital. The fiscal stance has also varied widely
across countries, but most countries have yet to fully
unwind the structural loosening adopted during the
crisis, despite closing output gaps, implying a procy-
clical stance in many cases.
The countries under review have generally comple-
mented macroeconomic policy with other measures to
manage capital inflows. Such measures include taxes
on certain inflows, minimum holding periods, and
currency-specific reserve requirements. Recourse to
these measures has been motivated by concerns about
export competitiveness, fi nancial stability, steriliza-
tion costs, and political constraints on fi scal policy.
Many measures were designed to address specific risks
associated with certain types of flows, such as their
impact on certain asset markets or their short-term
nature; and to guard against the risk of flow reversal.
Evidence to date on their effectiveness in reducing tar-
geted inflows is mixed, though in most cases currency
GLOBAL MONITORING REPORT 2011 ECONOMIC GROWTH IN DEVELOPING COUNTRIES 59

BOX 2.3 (continued)

appreciation has slowed or halted around the time of system. Beyond this, when confronted with surg-
the introduction of the measures. Market participants ing inflows, macroeconomic policies are appropriate
have expressed concerns about policy and regulatory tools—namely allowing the currency to strengthen,
uncertainty and distortions from measures that go accumulating reserves, and/or rebalancing the mon-
beyond macroeconomic policies. Even so, they con- etary and fiscal policy mix.
sider the measures implemented so far to be “at the Because they can potentially be used to avoid the
margin” and are likely to continue investing in coun- necessary macroeconomic policy adjustments, mea-
tries where the positive structural story dominates. sures designed to influence capital inflows (capital
The variety of policy responses adopted—and flow management measures or CFMs) could be used
their potential multilateral implications—suggests the when appropriate macroeconomic conditions are in
importance of developing a broadly accepted frame- place—when the exchange rate is not undervalued,
work for countries with open or partially open capi- reserves are more than adequate, and the economy is
tal accounts on policies to deal with capital inflows. overheating so that lowering policy rates would not
Choosing appropriate responses can be challenging be advisable. If these conditions exist but fiscal policy
given the uncertainties associated with the causes and is pro-cyclical, CFMs could be used temporarily to
effects of the inflows and with possible policy reac- complement fiscal tightening plans that are already in
tions. Even so, a framework for considering appro- place, in view of the lags associated with the macro-
priate macroeconomic and other policy responses to economic impact of fiscal consolidation. If CFMs are
inflows can be beneficial. Primacy should be given adopted, residency-based measures generally should
to structural measures that increase the capacity of be given lower priority, consistent with the general
the economy to absorb capital inflows and prudential standard of fairness that countries expect from their
measures that enhance the resilience of the financial participation in a multilateral framework.
Note: This box presents the main messages from IMF (2011b).

Capital Flows and Policy Responses in Selected Emerging Markets

Magnitude of Composition of Currency Reserve Monetary Inflation Real credit Fiscal policy Capital flow
net inflowsa net inflowsa appreciation increase policy growth Change in management
Average in the last Orange = Portfolio flows, % change in Increase in Change in % year over Average % year over cyclically measuresb
wave of inflows Gold = Other flows, the NEER from % of GDP policy rates year,r average during year,r average of adjusted fiscal
(% of GDP) Green = FDI the trough since from the trough in the recent of last 6 months 2006–08 last 6 months stance between
the crisis since the crisis wave 2009–10

Brazil 6.2 38.4 6.0 5.0 (4.5) 12.9 Y

Yes
Indonesia 2.6 19.4 7.4 6.2 (9.8) 9.2 Y
Yes
Korea, Rep. 1.9 17.5 10.7 3.3 (3.2) 0.4 Y
Yes
Peru 5.9 5.6 9.0 2.1 (3.2) 9.3 Y
Yes
South Africa 6.6 41.4 2.6 3.6 (6.4) –0.1 No
Thailand 5.0 9.3 22.3 3.1 (4.1) 4.3 Y
Yes
Turkey 6.9 6.5 1.7 7.9 (9.6) 21.4 Y
Yes

Sources: International Financial Statistics; Haver Analytics; GDS; IMF staff calculations.
a. Net inflows are defined as the sum of foreign direct investment, portfolio, and other investment balances. Calculations are made for the last wave of capital inflows
(2009Q3–2010Q2).
b. Capital flow management measures (CFMs) refer to certain administrative, tax, and prudential measures that are part of the policy tool kit to manage inflows.
60 ECONOMIC GROWTH IN DEVELOPING COUNTRIES GLOBAL MONITORING REPORT 2011

MAP 2.1 GDP: Economic growth in 2009 and 2010 has been uneven
IBRD 38475
APRIL 2011
GDP growth 2009

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Spain Turkey Armenia baijan Turkmenistan Rep. of Korea
United States Portugal Monaco Tajikistan Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola Malawi
Zambia Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
New
Dominican Puerto British Virgin
Poland GDP growth 2009 Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep.

Slovak Rep.
Real GDP growth rate (%)
U.S. Virgin Islands Antigua and Barbuda
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary
< -6
and Nevis
Dominica Slovenia Romania -6 ≤ <0
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and 0≤ <5
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino

Kosovo 5≤ < 10
Montenegro
Grenada FYR 10 ≤
Italy Macedonia
Trinidad Vatican Albania
R.B. de Venezuela
and Tobago City Greece no data

GDP growth 2010

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Armenia Rep.
United States Portugal Spain Monaco Turkey baijan Turkmenistan
Tajikistan
of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Pakistan Bhutan
Bahrain Nepal
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
New
Dominican Puerto British Virgin
Poland GDP growth 2010 Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep. Real GDP growth rate (%)

U.S. Virgin Islands Antigua and Barbuda Slovak Rep.
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary < -6
and Nevis Slovenia -6 ≤ <0
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and 0≤ <5
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

This map was produced by the Map Design Unit of The World Bank.
(Neth) (Neth) The Grenadines Barbados Marino
Montenegro Kosovo
5≤ < 10 The boundaries, colors, denominations and any other information
Grenada FYR
Trinidad
Italy Macedonia 10 ≤ shown on this map do not imply, on the part of The World Bank
Vatican Albania Group, any judgment on the legal status of any territory, or any
R.B. de Venezuela
and Tobago City Greece no data endorsement or acceptance of such boundaries.

Source: World Economic Outlook.

GLOBAL MONITORING REPORT 2011 ECONOMIC GROWTH IN DEVELOPING COUNTRIES 61

MAP 2.2 Fiscal balance: Countries are diverging in their responses to fiscal challenges
IBRD 38476
APRIL 2011
Fiscal balance 2009

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Spain Turkey Armenia baijan Turkmenistan Rep. of Korea
United States Portugal Monaco Tajikistan Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola Malawi
Zambia Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
New
Dominican Puerto British Virgin
Poland Fiscal balance 2009 Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep.

Slovak Rep.
(% GDP)
U.S. Virgin Islands Antigua and Barbuda
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary
< -10
and Nevis Slovenia -10 ≤ < -5
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and -5 ≤ <0
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino 0≤ <5

Montenegro Kosovo
Grenada FYR 5≤
Italy Macedonia
Trinidad Vatican Albania
R.B. de Venezuela
and Tobago City Greece no data

Fiscal balance 2010

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Monaco Tajikistan
of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Pakistan Bhutan
Bahrain Nepal
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
New
Dominican Puerto British Virgin
Poland Fiscal balance 2010 Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep. (% GDP)

U.S. Virgin Islands Antigua and Barbuda Slovak Rep.
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary < -10
and Nevis Slovenia -10 ≤ < -5
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and -5 ≤ <0
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

This map was produced by the Map Design Unit of The World Bank.
(Neth) (Neth) The Grenadines Barbados Marino
Montenegro Kosovo
0≤ <5 The boundaries, colors, denominations and any other information
Grenada FYR
Trinidad
Italy Macedonia 5≤ shown on this map do not imply, on the part of The World Bank
Vatican Albania Group, any judgment on the legal status of any territory, or any
R.B. de Venezuela
and Tobago City Greece no data endorsement or acceptance of such boundaries.

Source: World Economic Outlook.

62 ECONOMIC GROWTH IN DEVELOPING COUNTRIES
in low-income countries must also be made
more resilient so that progress is not derailed
by future shocks.
To achieve accelerated and sustained
growth, low-income countries will require
much higher investment in infrastructure. By
raising productivity and encouraging private
investment, closing the present large infra-
structure gap could substantially increase
rates of per capita income growth.16 The cost
of addressing Sub-Saharan Africa’s infra-
structure needs is estimated at around $93
billion a year, equivalent to 15 percent of the
region’s GDP (or 22 percent of GDP for the
region’s low-income countries).17 This raises
the twin challenges of investing efficiently
in infrastructure to get the biggest possible
growth dividend and fi nancing that invest-
ment in a sustainable manner.
Effective public investment management
is critical to efficient investing. It begins with
establishing strategic guidance to anchor
government thinking and inform sector-
level decisions, and with independent review
and analysis of the feasibility of prospective
projects. In later stages, project selection
processes, budgeting, implementation, proj-
ect evaluation, and audit are key.18 A new
index of the capacity of 71 developing coun-
tries (including 40 low-income countries)
to appraise, select, implement, and evalu-
ate infrastructure projects can guide public
investment management reforms to areas in
which they are needed most.19 Although the
index scores for many low-income countries
indicate weak capacity throughout the pro-
cess, this is not universal: Rwanda, for exam-
ple, scores better than many lower-middle-
income countries.
Financing more infrastructure spending
presents its own challenges, beginning with
debt sustainability. Infrastructure competes
with existing priorities (such as social spend-
ing) and with the new demands of adapting
to climate change.20 Ongoing needs for large-
scale grants and highly concessional loans
for investment underscore the importance
of donors meeting aid commitments, even
as they face fiscal constraints at home. (See
GLOBAL MONITORING REPORT 2011
chapter 5 for more discussion.) Given scarce
concessional financing, however, low-income
countries with moderate debt vulnerabilities
and effective public finance institutions would
be justified in borrowing on market terms to
finance productive investments, within the
limits of a sound debt management strategy.
Stronger domestic revenue mobilization
has a key role in sustainable infrastructure
financing. Tax revenue collections in low-
income countries lag behind those of lower-
middle-income countries by 6–8 percentage
points of GDP. While low-income countries
have large shares of hard-to-tax informal
and small-scale agricultural sectors, such
structural factors account for only part of the
difference. Closing this gap will require long-
term efforts. Experience suggests that vigor-
ous reforms to tax policy and tax administra-
tion can raise revenue ratios by 1 percentage
points in the first year and, if consistently
pursued, by up to 5 percentage points over
10 years. Individual country circumstances
vary, but tax policy reforms for a typical low-
income country would emphasize broaden-
ing tax bases (such as for value added and
corporate income taxes), increasing rates of
certain environmental and excise taxes, and
improving regional coordination on matters
such as corporate taxes.21 Tax policy reforms
should be complemented by efforts to secure
taxes from large and medium enterprises and
wealthy individuals, and by other tax admin-
istration reforms.
Enhanced market access for low-income-
country exports would also support higher
growth and help meet the MDGs. Multilat-
eral trade reform—especially by concluding
the World Trade Organization Doha Round
(see chapter 5)—would spur global trade and
growth and foster a development-friendly
global macroeconomic environment. Most
critically for low-income countries, which
need a stable global trading environment to
export and to attract investment, the Doha
Round would bring the added security of
tightened World Trade Organization trade
rules. Further actions by advanced countries
and major emerging market economies to
GLOBAL MONITORING REPORT 2011 ECONOMIC GROWTH IN DEVELOPING COUNTRIES 63

expand and improve trade preferences for the FIGURE 2.18 The overall debt outlook in low-income countries
least-developed countries could further boost seems favorable as fiscal buffers are being rebuilt along with the
recovery
growth in the poorest countries.22
Fiscal balances and debt
10 70
Making growth resilient in low-income
8 60
countries
6

median, % of GDP
50
With policy buffers drawn down because of 4

% of GDP
the global financial crisis, low-income coun- 40
2
tries now face the task of shoring up these 30
0
buffers to boost resilience to future adverse 20
–2
shocks. A gradual consolidation of low-in-
–4 10
come countries’ macroeconomic positions
over the medium term is projected, with –6 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
improving fiscal and current account bal- projected
ances, moderate inflation, generally adequate public debt (right axis) primary balance (left axis)
reserve positions, and declining debt paths. overall balance (left axis)
Almost three-fourths of low-income coun-
tries are seen improving their fi scal buffers Source: IMF 2010a.
over the next four years. But doing so will
require disciplined fiscal and monetary poli-
cies, together with vigorous financial and real FIGURE 2.19 Low-income countries projected to cut real spending
sector reforms. tend to have high deficits and debt
One-third of the projected improvement
in the primary balance would come from a 15 90
cyclical recovery in revenues. The balance 70
would come mainly from measures to boost 10
50
underlying revenue performance and trim
5 30
nonpriority spending, some of which are part

% of GDP
% of GDP

of longer-term reform efforts initiated before 10

0
the crisis. Additional donor support to coun- –10
tries with larger projected adjustments could –5 –30
help ease the burden of rebuilding fiscal buf- –50
fers. With low-income countries’ revenue-to- –10
–70
GDP ratios below potential, substantial and
–15 –90
sustained increases in fiscal revenues (as out- fiscal balance (left axis) gross debt (right axis)
lined above) are critical to rebuilding buffers countries increasing real primary expenditure
while making room for priority investments countries reducing real primary expenditure
(figures 2.18 and 2.19).
For most low-income countries, medium-
Source: IMF 2010a.
term debt dynamics are not a major concern Note: The average for 2010 is shown.
as they rebuild fiscal buffers along the recov-
ery path. For example, the median improve-
ment in the primary balance is projected at almost half the low-income countries are
1.3 percentage points of GDP over five years. expected to have fiscal deficits of below 2
The share of countries with fiscal deficits in percent of GDP by 2014, compared with one-
excess of 5 percent of GDP is projected to quarter in 2009. As growth recovers and
drop from almost half in 2009 to one-tenth fiscal situations improve, the median public
by 2014. At the other end of the spectrum, debt ratio would decline again: half the low-
64 ECONOMIC GROWTH IN DEVELOPING COUNTRIES
income countries would see public debt fall
below 40 percent of GDP by 2015, while one-
fi fth would have debt exceeding 65 percent
of GDP.
The global recovery is projected to boost
demand for exports and strengthen current
account balances, helping bolster reserve
cushions. The projected improvement in
the external environment would help main-
tain median reserve coverage at around the
equivalent of four months of imports over the
medium term, although country experience
would differ: one in seven low-income coun-
tries would have reserve coverage exceeding
six months of imports, while one in 20 would
have less than two months.
Exchange rate policies should continue to
be used to cushion the effect of future volatil-
ity where possible. Many low-income coun-
tries with fi xed exchange rate regimes could
benefit from somewhat faster accumulation
of reserves. Conversely, some with floating
rates appear to have built more than adequate
reserve cushions; they could afford to raise
spending (figures 2.20 and 2.21).
Most low-income countries can continue
using monetary policy to support the recov-
ery if the present moderate rates of inflation
FIGURE 2.20 The current account balance is
projected to improve gradually in low-income
countries as exports rebound
38
36
34
32
% of GDP
30
28
26
24
22
20
2007 2008 2009 2010 2011 2012
projected
exports of goods and services (left axis)
current account balance, including FDI
(right axis)
Source: IMF 2010a.
GLOBAL MONITORING REPORT 2011
FIGURE 2.21 Reserve cushions would not
improve much among low-income countries with
relatively low reserves
Reserve coverage by initial coverage, 2009
6
prospective imports of goods
5
median, months of
4
and services
3
2
1
0
2009 2010 2011 2012 2013 2014
projected
high 2009 coverage (38 countries)
medium 2009 coverage (8 countries)
low 2009 coverage (18 countries)
Source: IMF 2010a.
Note: “Low” is defined as having less than three months of reserves cover-
age; “medium” as having more than three but less than four months of
reserves coverage.
continue, but they must closely monitor the
effects of commodity prices on their domestic
inflation rates, given the risks associated with
rising world prices for food and fuel. If these
global shocks persist and feed through to
local prices, monetary policy should accom-
modate the direct impact; however, it may
need to be tightened in some cases to counter
second-round effects.
The crisis has underscored the impor-
0 tance to low-income countries of adequate
–1 financial regulatory frameworks, effective
–2 supervision, and sound financial institutions.
average, % of GDP
Supervisory authorities will need to ensure
–3
that credit standards do not deteriorate dur-
–4
ing times of strong credit growth. Regula-
–5
tory frameworks should focus on the risks
–6
assumed by banks and the sources of their
–7
business growth to ensure that these are sus-
–8
tainable. Closer supervision is required to
ensure that banks are complying with pru-
dential regulations. In banks where financial
strains have been significant, the balance
sheet cleanup should proceed quickly—
recognizing losses and having shareholders
inject needed capital.
GLOBAL MONITORING REPORT 2011
Developing domestic debt markets would
help mobilize national savings and increase
low-income country policy buffers, helping
cushion the impact of the crisis. Low-income
countries also have enormous investment
needs that require financing. Although exter-
nal financing has to remain a significant part
of the financing mix, policies to mobilize
domestic savings and develop domestic debt
markets would broaden the range of available
options.
Reforms that promote economic diversifi-
cation also have an important role to play in
managing macroeconomic volatility and fos-
tering durable growth.23 Such diversification
is likely to involve further trade integration,
BOX 2.4 Fragile states—experience and implicationsa
Fragile states are generally off target to meet the
MDGs. They are typified by poor initial condi-
tions (left figure below), slow GDP growth (right
figure below), and macroeconomic instability. These
Initial conditions
3.57
56
2.82
1.78
38
1.24
CPIA 2008 PIMI % of coastal
institutions countries
geography
non-fragile states/low-income countries
fragile states/low-income countries
Source: IMF staff calculations.
Note: CPIA = Country Policy and Institutional Assessment; PIMI = public investment
management index.
ECONOMIC GROWTH IN DEVELOPING COUNTRIES 65
which will require both low-income countries
and their trading partners to undertake fur-
ther reforms of their trade regimes. Barriers
in labor and product markets also impede
the emergence of new sectors and the entry
of new firms; addressing these barriers would
promote diversification. To the extent that
transformation in economic structures leads
to social dislocation, it would be important
to ensure that effective social safety nets are
in place to protect vulnerable groups (see the
discussion of indigenous peoples and socially
excluded groups in chapter 4). Fragile states
face special challenges (box 2.4; also see fig-
ure 1.7 and box 1.4 in chapter 1 and box 5.4
in chapter 5).
characteristics contribute to a cycle of underdevelop-
ment that reinforces political instability and conflict,
with negative regional spillovers.
Growth of real GDP and consumption,
fragile states and nonfragile states, 1970–2009
5
4.47
0.23
4
0.09 3 2.87
percent
2
1.52
1
0.28
0
civil conflict, mean of real private mean of real GDP growth
average consumption growth
conflict
non-fragile states/low-income countries
fragile states/low-income countries
Source: IMF staff calculations.
continued
66 ECONOMIC GROWTH IN DEVELOPING COUNTRIES
BOX 2.4 Fragile states—experience and implications (continued)
The quality of institutions (measured by the
Country Policy and Institutional Assessment and
by the index of public investment management men-
tioned above) tend to be considerably weaker in frag-
ile states than in other low-income countries.b Fragile
states are also characterized by lower levels of devel-
opment and a much higher incidence of conflict.c
Slow real GDP growth
• During 1970–2009, average real GDP growth in
fragile states was about one-fi fth that of other low-
income countries. The difference in the growth
performance is especially apparent since the early
1990s.
• While the number of growth upswings was broadly
similar, growth downswings are twice as frequent
in fragile states.
• Output losses that follow economic and political
shocks are larger and persist longer than in other
low-income countries.
Macroeconomic instability
• Measured by high inflation, large debt-to-GDP
ratios, and low international reserves, macroeco-
nomic instability has been much higher in fragile
states than in other low-income countries.
Boosting the impact of international
support
To regain momentum toward the MDGs,
international cooperation will be required
on three fronts. First, low-income countries
in particular will need a strong and stable
global economic environment in which to
continue growing. To secure such an environ-
ment, the advanced market economies need
to repair and reform their fi nancial systems
and address their fiscal imbalances, and
emerging market economies should adjust
their macroeconomic policies to reorient
GLOBAL MONITORING REPORT 2011
Implications for global policy
International organizations and development part-
ners have recognized that the problems of fragile
states present distinct challenges and warrant well-
targeted approaches. Concerned about preserving
peace and security in these countries and aware of
the risk of spillovers to neighbors, they have made
considerable efforts to develop effective paradigms
for engagement.
Their key challenge for effective engagement is to
devise strategies that recognize these states’ capacity
constraints, their large fi nancing needs, and the need
for prolonged engagement. Furthermore, given their
multidimensional needs, fragile states would benefit
from a well-coordinated and comprehensive strategy
of assistance from the international community. This
strategy should emphasize the paramount need to
secure peace and security; the need to rebuild capac-
ity and strengthen institutions through a common
technical assistance strategy; and the design, scale,
and timing of macroeconomic adjustment that can
secure a virtuous cycle of development.
a. The IMF does not maintain a formal list of fragile states,
and the analysis here uses the World Bank list.
b. The average Country Policy and Institutional Assessment
score for fragile states in 2008 was 2.82, compared with 3.57
for nonfragile low-income countries.
c. This is indicated by lower per capita GDP and investment
ratios and by weaker health and education indicators.
growth domestically and to avoid possible
overheating.
Second, actions are needed to help low-
income countries achieve and sustain more
rapid economic growth and restore their
policy buffers. Inadequate infrastructure is
one major challenge for growth. Address-
ing the infrastructure gap requires stronger
public investment management systems and
enhanced domestic revenue mobilization—
areas where international organizations can
offer policy advice and technical assistance.
It also requires large-scale, highly conces-
sional finance, underscoring the need for
GLOBAL MONITORING REPORT 2011
donors to meet aid commitments and to
strengthen the overall effectiveness of aid.
Another major challenge is to expand trade
opportunities, particularly for the poorest
countries. Key steps include completing the
Doha Round and expanding and improving
Aid for Trade.24
Third, fragile states lag farthest behind in
reaching the MDGs, and they require addi-
tional support to help build institutions and
move toward a virtuous circle of develop-
ment, peace, and security.
Notes
1. Except where otherwise noted, this chap-
ter distinguishes “advanced” and “emerging
and developing” economies according to the
IMF World Economic Outlook country clas-
sification. Within the latter group, “emerging
economies” are those not eligible for the IMF
Poverty Reduction and Growth Trust (PRGT)
(see http://www.imf.org) and “low-income
countries” (or “developing economies”) are
those eligible for the PRGT. The analysis in
box 2.4 is based on the World Bank definition
of fragile states. Least-developed countries are
a subset of low-income countries, as defi ned
by the United Nations.
2. The January 2011 Global Economic Pros-
pects (World Bank 2011a) examines the pov-
erty implications of higher food prices (box
6 of that volume) and explores links between
financial markets and food prices, finding
little evidence that investment-based demand
has driven up prices (box 7).
3. In 2009, increases in the ratios of reserves
to imports reflected the IMF special draw-
ing rights (SDRs) allocation (see the factsheet
on SDRs at http://www.imf.org) and 2009’s
sharp contraction in global trade.
4. IMF 2010a.
5. World Bank 2011a.
6. World Bank 2011b, table 2.
7. World Bank 2011b.
8. In addition to immediate income loss from not
working—loss for society and for the individ-
ual—the considerable human costs of unem-
ployment include long-lasting income loss,
increased illness and mortality, and reduced
ECONOMIC GROWTH IN DEVELOPING COUNTRIES 67
educational achievement and social cohesion
(ILO-IMF 2010). Policy makers can take
the following steps to improve employment
opportunities (including where young adult
unemployment runs high): establishing more
flexible labor market regulations together
with effective social safety nets; implementing
programs to upgrade skills and better match
them with the demands of labor markets; and
strengthening the business environment (IMF
2010d).
9. IMF 2011c.
10. In addition to facilitating greater price stabil-
ity, there is evidence that fiscal adjustment in
emerging economies has typically helped pro-
mote income equality in the longer term. See
IMF (2010b), appendix 3.
11. More than half of the additional deficit was
financed domestically, including borrowing in
domestic debt markets, central bank fi nanc-
ing, or drawing down government deposits.
External borrowing accounted for much of
the rest, with the IMF financing a significant
component.
12. IMF country desks were asked in January
2011 to assess the quality of macroeconomic
policies in 2010 as unsatisfactory, adequate,
or good.
13. Recovery has been very strong in emerging
Asia and Latin America and more restrained
in the Middle East and emerging Europe,
where output in some countries remains well
below precrisis levels.
14. Emerging and developing economies’ export
volumes grew 13 percent in 2010 and are
expected to remain buoyant in 2011.
15. IMF 2010c.
16. Calderon (2009) estimates that by increasing
the stock and quality of their infrastructure to
that of Mauritius, Sub-Saharan low-income
countries would raise their annual per capita
income growth by more than 2 percentage
points.
17. Briceno-Garmendia, Smits, and Foster 2008.
18. Rajaram et al. 2010.
19. Dabla-Norris et al. 2010.
20. Brumby and Verhoeven (2010) note that
though government investment spending
among low-income countries accelerated in
2009–10, fiscal consolidation pressures may
reduce its growth over the next few years.
68 ECONOMIC GROWTH IN DEVELOPING COUNTRIES
21. IMF 2011a.
22. Elborgh-Woytek, Gregory, and McDonald
2010.
23. Haddad, Lim, and Saborowski 2010.
24. Hoekman and Wilson 2010; see chapter 5 of
this volume.
References
Briceno-Garmendia, C., K. Smits, and V. Fos-
ter. 2008. “Financing Public Infrastructure
in Sub-Saharan Africa: Patterns, Issues, and
Options.” Africa Infrastructure Country Diag-
nostic Background Paper No. 15, World Bank,
Washington, DC.
Brumby, J., and M. Verhoeven. 2010. “Public
Expenditure after the Global Financial Crisis.”
In The Day after Tomorrow: A Handbook on
the Future of Economic Policy in the Devel-
oping World, ed. O. Canuto and M. Giugale,
193–206. Washington, DC: World Bank.
Calderon, C. 2009. “Infrastructure and Growth
in Africa.” Policy Research Working Paper
4914, World Bank, Washington, DC.
Dabla-Norris, E., J. Brumby, A. Kyobe, Z. Mills,
and C. Papageorgiou. 2010. “Investing in Pub-
lic Investment: An Index of Public Investment
Efficiency.” Working Paper 11/37, Interna-
tional Monetary Fund, Washington, DC.
Elborgh-Woytek, K., R. Gregory, and B. McDon-
ald. 2010. “Reaching the MDGs: An Action
Plan for Trade.” Staff Position Note 10/14,
International Monetary Fund, Washington,
DC.
Haddad, M., J. J. Lim, and C. Saborowski. 2010.
“Managing Openness and Volatility: The Role
of Export Diversification.” Poverty Reduction
and Economic Management Network, World
Bank. Economic Premise 6 (March). http://
siteresources.worldbank.org/INTPREMNET/
Resources/EP6.pdf.
Hoekman, B., and J. Wilson. 2010. “Aid for
Trade: An Action Agenda Looking Forward.”
Poverty Reduction and Economic Management
Network, World Bank. Economic Premise 25
GLOBAL MONITORING REPORT 2011
(August). http://siteresources.worldbank.org/
INTPREMNET/Resources/EP25.pdf.
ILO-IMF (International Labour Organization-
International Monetary Fund). 2010. “The
Challenges of Growth, Employment and
Social Cohesion.” Paper prepared for the Joint
ILO-IMF Conference in cooperation with the
Office of the Prime Minister of Norway, Oslo,
Norway, September 13.
IMF (International Monetary Fund). 2010a.
“Emerging from the Global Crisis: Macroeco-
nomic Challenges Facing Low-Income Coun-
tries.” Washington, DC. http://www.imf.org/
external/np/pp/eng/2010/100510.pdf.
——— . 2010b. Fiscal Monitor. Fiscal Exit: From
Strategy to Implementation. Washington, DC.
http://www.imf.org/external/pubs/ft/fm/2010/
fm1002.pdf.
——— . 2010c. “Reaching the MDGs: Macroeco-
nomic Prospects and Challenges in Low-Income
Countries.” Washington, DC. http://www.imf.
org/external/np/exr/mdg/2010/091610.pdf.
——— . 2010d. Regional Economic Outlook:
Middle East and Central Asia. October. Wash-
ington, DC.
——— . 2011a. “Revenue Mobilization in Devel-
oping Countries.” February.
———. 2011b. “Recent Experiences in Managing
Capital Inflows—Cross-Cutting Themes and
Possible Policy Framework.”
———. 2011c. “Strengthening Fiscal Credibility.”
Fiscal Monitor Update January. http://www.
imf.org/external/pubs/ft/fm/2011/01/update/
fmindex.pdf.
Rajaram, A., T. Minh Le, N. Biletska, and J.
Brumby. 2010. “A Diagnostic Framework for
Assessing Public Investment Management.”
Policy Research Working Paper 5397, World
Bank, Washington, DC.
World Bank. 2010. Global Monitoring Report:
The MDGs after the Crisis. Washington, DC.
———. 2011a. Global Economic Prospects: Nav-
igating Strong Currents. Washington, DC.
——— . 2011b. Migration and Remittances Fact-
book, 2011. Washington, DC.

Linking Spending and
Outcomes: Some Lessons
from Impact Evaluations in
Education and Health
E
ducation and health are key dimen-
sions of many of the Millennium
Development Goals (MDGs). As 2015
approaches, calls for greater development
effectiveness are taking on increased urgency
for two reasons: development assistance for
health and education has risen to unprece-
dented amounts, but has not led to expected
improvements in outcomes; and the global
crisis has forced a reexamination of social
spending.
This chapter highlights lessons about this
disconnect between spending and outcomes
derived from recent impact evaluations in
health and education. Although designing
the right approach to improving outcomes is
complex and context dependent, a system-
atic evidence base generated through impact
evaluations can provide useful guidance for
policy makers. Furthermore, the body of
these evaluations has grown tremendously in
recent years. The base of impact evaluations
is still far from complete, and much more
work is needed; but some interesting findings
have already begun to emerge.
Existing impact evaluations show that
efforts aimed at improving access to educa-
tion and health services have met with some
success. However, it has been much more
Girls from Lagos, Nigeria, are eager to get on the school bus.
3
difficult to improve the quality of education
and health services, which remain low in
many developing countries. Hence, the dis-
connect between development spending and
learning and health outcomes. The discon-
nect stems in part from the narrow focus on
financing inputs, while ignoring other parts
of the causal chain that links public spend-
ing to changes in outcomes. The causal chain
shows that incentives facing both service pro-
viders and consumers are important mediat-
ing variables in the link between development
spending and outcomes, and policies have
often failed to sufficiently account for them.
Not surprisingly, therefore, one of the strong
lessons emerging from impact evaluations is
that continuing to increase provision of tra-
ditional inputs will have only limited impact
if issues of service delivery and consumer
behavior are not addressed. As highlighted in
the 2004 World Development Report: Mak-
ing Services Work for Poor People, improv-
ing service delivery in health and education,
in addition to increasing resources, is vital to
reach many MDGs.
Although this chapter points to the limited
impact of input provision, it does not ques-
tion the need for additional financing because
improving quality also requires resources. It
71
72 LINKING SPENDING AND OUTCOMES GLOBAL MONITORING REPORT 2011

is important to ensure that institutions pro- Despite these huge funding gains, progress
vide services efficiently and responsively— toward development targets has been uneven.
and that their potential clients have the Lack of resources only partly explains many
ability and desire to use services efficiently of the remaining gaps because links between
and hold service providers accountable for spending and human development outcomes
quality. And when quality and institutional are weak,1 and good policies and strong insti-
arrangements improve, the returns to addi- tutions are central to improving the produc-
tional investments are also greater. This tivity of education and health spending.
focus on institutional arrangements is con- True, access to education and health ser-
sistent with the findings presented in chapter vices has expanded sharply in recent years.
1, which highlights policies and institutions For example, basic immunization coverage
in explaining the heterogeneity of MDG in low-income countries increased by 20 per-
progress. centage points during 2000–08.2 Primary and
secondary school enrollment rates have also
improved, in some cases dramatically. But the
Disconnect between expenditure quality (or outcomes) of education and health
and outcomes remains a grave concern. In education, this is
Budget allocations for health and educa- made evident by the poor learning outcomes of
tion are at an all-time high in the developing school children.3 Often, countries that spend
world. Development assistance for health has more on primary education (compared with
quadrupled since 1990, peaking at $24 bil- the level predicted by per capita income) gen-
lion in 2008 (figure 3.1a). Health spending erate on average only a small improvement in
by developing-country governments has also test scores (compared with scores predicted by
peaked (albeit at a much lower level), nearly per capita income) (figure 3.2). In India, even
doubling to reach $240 million during 1995– though most children of primary-school age
2006. Similarly, development assistance for were enrolled in school, 35 percent of them
education has doubled since 2002, reaching a could not read a simple paragraph and 41 per-
high of $10.8 billion in 2007 (figure 3.1b). cent could not do a simple subtraction.4

FIGURE 3.1 Government and donor spending on health and education is unprecedented

a. Spending on health b. Spending on education

30 1,000 12
900
25 800 10
US$ billions, 2006

US$ billions, 2006

US$ billions, 2007

20 700 8
600
15 500 6
400
10 300 4

5 200 2
100
0 0 0
1990 1993 1996 1999 2002 2005 2008 2002 2003 2004 2005 2006 2007

donor health assistance government health donor education assistance aid to basic education
(left axis) expenditure (right axis)

Sources: IHME 2010; OECD-DAC 2009, cited in UNESCO 2010.

Note: Includes all on-budget and off-budget health-related disbursements from bilateral donor agencies, grant-making and loan-making institutions,
United Nations agencies, and nongovernmental organizations. Development assistance to education comes not only as direct allocations to the education
sector but also through general budget support.
GLOBAL MONITORING REPORT 2011 LINKING SPENDING AND OUTCOMES 73

FIGURE 3.2 The relationship between FIGURE 3.3 There are wide differences in the share of public
expenditure and learning outcomes is weak health spending going to the rich and the poor

20 35

share of public health expenditures, %

(controlling for GDP per capita)
normalized primary test score

15
30
10
25
5
20
0
–5 15

–10 10
–15 5
–20 0
–15 –10 –5 0 –5 –10 –15
Sub-Saharan South Europe and East Asia Latin America
spending on primary education Africa Asia Central Asia and Pacific and the
(controlling for GDP per capita) Caribbean

poorest quintile richest quintile

Source: Bruns, Filmer, and Patrinos 2011.
Note: The graph shows the deviation of normalized test scores from that
predicted by GDP per capita against the deviation of public spending
Source: Authors’ calculations, based on data from Filmer 2003.
on primary education per student (relative to GDP per capita) from that
predicted by GDP per capita.

In health, basic immunization rates have health spending than do poor people (figure
expanded, but full immunization coverage— 3.3). In Sub-Saharan Africa, South Asia, and
needed for the full impact on child mortal- Europe and Central Asia, the incidence of
ity—is much lower. 5 Likewise, the global health spending among the richest fifth of
average attendance at a minimum of one the populace was more than twice that of the
prenatal visit is 78 percent, but attendance poorest fifth.
at four visits—needed for the full impact on So, what are some of the factors that cause
maternal mortality—is around 48 percent.6 the disconnect between public spending and
Clinical competence may also be lacking (as changes in human development outcomes?
in Senegal, where an assessment of service
quality found that only 34 percent of cases
were correctly diagnosed).7
Understanding the disconnect
So, more resources—even when increasing Calls for greater development effectiveness
coverage—may not be enough to have a big are implicitly calls to strengthen the links in
effect on outcomes. the causal chain between spending on inputs
The disconnect between spending and and human development outcomes. Each link
outcomes partly reflects the failure of human of the chain, if weak, can prevent increased
development spending to reach poor people. public fi nancial and physical resources from
Public spending on health and education is being translated into improvements in human
generally believed to be an effective means to development outcomes: the link between
reach the poor, but empirical evidence fails resources allocated and services and goods
to support this assumption. Since the 1990s, generated, between goods and services gen-
numerous studies have found that public erated and consumption, and between con-
health spending is not concentrated among sumption of goods and services and educa-
the poor and that the rich benefit dispropor- tion outcomes (figure 3.4). The first link
tionately from public health subsidies.8 Apart emphasizes supply-side factors, the third link
from Latin America and the Caribbean, the demand-side factors. The middle link is the
rich receive far greater benefits from public critical intermediate step where the demand-
74 LINKING SPENDING AND OUTCOMES
FIGURE 3.4 Links between public expenditure and human
development outcomes
Public financial and
physical resources
Goods and services
Service generated
providers
Policy
makers
Clients Consumption of
goods and services
Human
development
Sources: Adapted from Go 2010 and World Bank 2003.
Note: The service delivery triangle showing the interaction among clients, service providers, and
policy makers has been adapted from the 2004 World Development Report (World Bank 2003). This
diagram is a simplification of very complex relationships among spending, supply, service delivery,
demand, and outcomes. There are nuances that are not captured here. One such nuance is that
services provision implies use, whereas the generation of goods does not. Another is that different
service providers (government, nongovernment, faith-based) have different motivations and incen-
tives, so their interaction with clients and policy makers and the outcomes will be different. See, for
example, Reinikka and Svensson (2010). Finally, incentives created by different financing arrange-
ments (including prepayment mechanisms) and their impact on provider and consumer behavior
are not fully captured here.
side and supply-side factors intersect for the
delivery of health and education services.
On the supply side, inequitable resource
allocation, lack of complementary inputs
(both sectoral and cross-sectoral), and
crowding out of private sector provision can
weaken the link between public spending
and the amount of goods and services gen-
erated. And the consumption of these goods
and services will depend critically on the
quality of service delivery, a crucial interme-
diate step where the results chain frequently
breaks down. This can often be traced to
poor incentives for service providers and low
accountability. The weak service delivery
link can also reinforce existing inequalities
in human development outcomes because
GLOBAL MONITORING REPORT 2011
the challenges of service delivery are often
more pronounced in hard-to-reach areas and
underserved populations.
The service delivery triangle in figure 3.4
outlines the relationships among different
system actors. Citizens, especially poor peo-
ple, who ultimately consume the education
and health services generated by the public
system are the clients. They have a direct
relationship with frontline service providers,
such as teachers in public schools and health
care workers in public health facilities—the
short route of accountability. Crucially, how-
ever, the service providers generally have
no direct accountability to the consumers,
unlike in a market transaction. Instead, they
are accountable only to the government that
employs them. The accountability route from
consumers to service providers is therefore
through the government—the long route. To
hold service providers accountable for the
quantity and quality of services provided,
citizens must act through the government—
a process that is difficult for poor people
especially because they can seldom organize
themselves and be heard by policy makers.
Moreover, the government rarely has enough
information—or indeed the mechanisms—to
improve service provider performance.
Demand-side factors also mediate between
public spending and human development out-
comes. The lack of uptake from consumers
resulting from the lack of demand, informa-
tion, or other factors can undermine the posi-
tive impacts of public spending in health and
education.
All this suggests that merely increasing the
supply of human development inputs and ser-
vices will not automatically improve human
development outcomes. Thus it is that the
pervasive approach in global resource mobili-
zation efforts (that is, filling narrowly defined
resource gaps through predominantly supply-
side interventions without strengthening ser-
vice delivery and consumer uptake) has lim-
ited impact.
What do impact evaluations say?
By understanding the causal pathways, prac-
titioners can be better placed to improve
GLOBAL MONITORING REPORT 2011
development effectiveness and thus accelerate
progress toward the MDGs (and secure more
value for money).
Impact evaluations have emerged as an
important tool to conduct such analyses.
They assess the changes in the well-being of
individuals that can be directly attributed to
a particular project, program, or policy—and
thereby provide robust and credible evidence
on how a project has performed and what
changes they have “caused.” At a broader
level, the information they generate can con-
tribute to a systematic evidence base on the
kinds of interventions that work. Rigorous,
project-specific impact evaluations can also
shed light on the broader functioning of the
education and health systems and on general
household behavior. They often have forced a
rethinking of assumptions regarding human
behavior (as illustrated in box 3.1) or brought
to light unexpected impacts of certain types
of development interventions (as illustrated in
box 3.2).
Because of the explicit focus on causal-
ity, the main methodological requirement for
an impact evaluation, and what sets it apart
from other types of monitoring and evalua-
tion, is the need for a credible counterfactual
(that is, what the outcome for project benefi-
ciaries would have been without the project).9
Establishing a counterfactual retrospectively
is hard. For this reason, it is best to design the
impact evaluation alongside the program and
to build it into the program.
Some caveats regarding impact evaluations
need to be noted. Although extremely useful,
impact evaluations cannot answer all devel-
opment questions. Furthermore, the exist-
ing knowledge base of impact evaluations in
education and health is far from complete.
In many areas, the current evidence does
not support as clear an answer as one would
like. In others, it does not answer some key
questions. The results of many individual
impact evaluations cannot be generalized.
In fact, the question of external validity of
impact evaluations has been an important
and often somewhat contentious one.10 For-
mulating general recommendations from the
conclusions of impact evaluations is often
hampered by lack of comparability among
LINKING SPENDING AND OUTCOMES 75
settings, different forms of the intervention,
and varying levels of rigor in the evaluation.
Also, very few impact evaluations inform us
about the longer-term impact of programs or
whether observed impacts persist after the
program has ended. Another frequently heard
critique of impact evaluations is that they do
not focus enough on the reasons why certain
projects work and others do not.11 It has also
been argued that impact evaluations do not
lend themselves easily to distributional anal-
ysis because they are focused on estimating
average treatment effects.12 Finally, very few
impact evaluations collect or report on pro-
gram cost data; and this represents a missed
opportunity to gain insights into efficiency,
cost effectiveness, as well as longer-term
financing issues such as sustainability.
Many of these objections can be resolved
by expanding the base of rigorous impact
evaluations on certain topics. Researchers
should replicate successful models in differ-
ent contexts to assess the extent to which
programs work under varying circumstances.
In addition, replicating interventions that
have been successful in small-scale settings
at a regional or national level will help con-
tribute to knowledge of what works in the
real world. In certain cases, such as incen-
tives and accountability, there is a need to
test various combinations and extensions of
existing approaches. Conducting a series of
related evaluations in a comparable setting
with cross-cutting treatment designs gener-
ates considerable cost savings in data col-
lection and allows cost-effectiveness com-
parisons across program variants. It is also
important to collect cost and process data,
data on intermediate outcomes, and good
qualitative data to complement quantitative
data. The World Bank’s Development Impact
Evaluation (DIME) initiative is encouraging
the use of impact evaluations and promoting
their integration into government programs
(box 3.3).
Although this chapter focuses on impact
evaluations, such evaluations are not the
only source of evidence concerning effective
interventions to advance the education and
health MDGs. Other evaluation methods
also contribute to this debate—such as mixed
76 LINKING SPENDING AND OUTCOMES
BOX 3.1 Some impact evaluations have forced a rethinking of our assumptions about
HIV/AIDS
Development interventions are often designed on the
basis of certain assumptions, particularly for HIV/
AIDS—an area where knowledge has grown by leaps
and bounds, especially over the past decade. Impact
evaluations have contributed to that learning, and
some evaluations have shown how erroneous these
assumptions can be. Here are a few examples.
Assumption: Promoting knowledge of
HIV/AIDS will reduce risky behavior
Information and education campaigns have been
the main focus of HIV/AIDS prevention campaigns.
Although they have improved knowledge and self-
reported behavior, their apparent impact on behaviors
may actually be the result of a reporting bias fueled
by the people’s greater knowledge of what they would
need to do to reduce their risk, rather than a reflection
of substantial changes in actual behaviors. Two recent
meta-analytic reviews show that only a small fraction
of behavior change interventions had an impact on
HIV or other sexually transmitted infections.a Infor-
mation needs to be better targeted and packaged to
have an impact on actual behavior. Nor is more infor-
mation necessarily better. Consider a program that
sent text-message reminders concerning adherence to
antiretroviral treatment: weekly reminders improved
adherence, daily reminders did not. People got habitu-
ated to them or perhaps considered them intrusive.
Assumption: More HIV testing will lead to
declines in risky behavior
HIV testing is one of the key policy responses to the
HIV/AIDS epidemic in Africa, but there is little rig-
orous evidence on how individual sexual behavior
responds to testing. Impact evaluations from East
Africa produce three findings.b First, individuals
surprised by an HIV-positive test are more than five
times more likely to contract a sexually transmit-
ted infection than are members of a similar untested
control group, indicating an increase in risky sexual
behavior. Second, individuals who believed they were
at high risk for HIV have a 60 percent decrease in
their likelihood of contracting a sexually transmit-
ted infection following an HIV-negative test, indi-
cating safer sexual behavior. Third, when HIV tests
GLOBAL MONITORING REPORT 2011
agree with a person’s belief of HIV infection, there
is no statistically significant change in contracting a
sexually transmitted infection. Using the distribution
of beliefs of HIV infection and prevalence from the
study, the evaluation fi nds the overall number of HIV
infections to increase by 25 percent when people are
tested, compared with when they are unaware of their
status—an unintended consequence of testing.
Assumption: It is usually stigma that prevents
people from picking up HIV test results
It is often argued that getting people to learn their
HIV status is crucial for fighting HIV/AIDS, but that
stigma and fear of obtaining a positive result create
a major barrier preventing people from picking up
their results at testing centers. An impact evaluation
in Malawi found, however, that small incentives and
deadlines were enough to induce people to do this.c
Distance to the center was also a key determinant
of attendance. These fi ndings suggest that procras-
tination and the inconvenience of travel, rather than
stigma, explain much of the problem.
Assumption: People who test positive will
reduce their risky behavior
Although people can behave altruistically once they
know they are HIV-positive, they may also show
disinhibition behavior because they have less to lose
when engaging in risky behavior. A recent study in
Mozambique d found that risky sexual behaviors
increase in response to the perceived changes in risk
associated with greater access to antiretroviral ther-
apy. So, scaling up access to antiretroviral therapy
without prevention programs may not be optimal if
the objective is to contain the disease because people
would adjust their sexual behavior in response to the
perceived changes in risk.
a. McCoy, Kangwende, and Padian 2009; Mavedzenge,
Doyle, and Ross 2010.
b. Weinhard et al. 1999; Gong 2010.
c. Thornton 2005.
d. De Walque, Kazianga, and Over 2010.
GLOBAL MONITORING REPORT 2011 LINKING SPENDING AND OUTCOMES 77

BOX 3.2 Spillovers and unintended effects can be important

Impact evaluations have helped highlight positive
spillovers of certain types of human development
interventions. In Kenya, providing deworming drugs
at treatment schools lowered the incidence among
nontreated children as a result of a fall in transmis-
sion rates. a Spillover effects are also shown to be
strong in the provision of AIDS antiretroviral treat-
ment. Also in Kenya, children’s weekly hours of
school attendance increased more than 20 percent
within six months of initiating antiretroviral treat-
ment for any adult household member.b For boys in
treatment households, these increases closely followed
their reduced supply of paid labor. Similarly, young
children’s short-term nutritional status—measured as
weight for height—also improved dramatically.
Although Mexico’s conditional cash transfer
(CCT) program Opportunidades/Progresa targeted
poor children, school participation also increased
among children above the poverty cutoff.c Scholar-
ship programs for girls have demonstrated positive
externalities for boys’ school participation and teach-
ers’ attendance.d
Some projects, however, may have unintended
negative consequences. For example, increasing the
availability of affordable antimalarial drugs—as
with artemisinin-based combination therapy, the
only remaining effective class of first-line antima-
larial drugs—may result in increased resistance of
the malaria parasite to those drugs and overtreat-
ment of individuals not infected with malaria who
are presumptively diagnosed (and the resultant nega-
tive health outcomes because the true cause of illness
remains untreated). There are also concerns over the
sustainability of the subsidy (as a result of inefficient
targeting). Cohen, Dupas, and Schaner (2010) con-
fi rmed the fears of overtreatment and showed that
subsidized access to malaria rapid diagnostic tests
substantially reduced these unintended consequences.
Another example of a negative spillover effect is that
some CCT programs show that, in some contexts,
parents compensate for the reduction in labor mar-
ket work of one child (the CCT beneficiary who is
required to attend school) by increasing the hours
worked by other siblings.e
a. Miguel and Kremer 2004.
b. Zivin, Thirumurthy, and Goldstein 2006.
c. Lalive and Cattaneo 2006; Bobonis and Finan 2009.
d. Kremer, Miguel, and Thornton 2009.
e. Barerra-Osorio, Linden, and Urquiola 2007; Filmer and
Schady 2009.

methods, objectives-based approaches, quali- interventions and impacts—something that

tative methods, and theories of change.
This chapter draws especially on the body
of knowledge emerging from impact evalu-
ations in the areas of health and education.
Even though we have restricted the scope of
this discussion to health and education, it is
important to recognize that impact evalu-
ations are also generating valuable policy-
relevant evidence in the areas of other MDGs
(such as water and sanitation)13 that are not
discussed here. In synthesizing the evidence
on health and education, we have restricted
ourselves to the more rigorous empirical
work that has relied on a viable identifica-
tion strategy (that is, the counterfactual is
reliable) and produced causal links between
traditional monitoring and evaluation does
not always accomplish. Acknowledging
that not all rigorous evidence comes from
impact evaluations alone, we focus only on
them, partly because of limitations of space
and partly because a lot of evidence coming
from impact evaluations is fairly recent and
highlights how evidence-based decision mak-
ing can be operationalized (for examples, see
boxes 3.1 and 3.2). As noted, the evidence
base from impact evaluations in health and
education sectors is still evolving and, at this
stage, remains very far from complete. In
light of that, the chapter refrains from mak-
ing any explicit policy recommendations or
engaging in detailed policy discussions.
78 LINKING SPENDING AND OUTCOMES
BOX 3.3 The DIME initiative
There are several initiatives in the World Bank to
improve the quality of evidence to inform development
practice. One example is the Development Impact
Evaluation (DIME) initiative. Created in 2005 in the
Office of the Chief Economist, DIME was relaunched
in 2009 as a broad-based, decentralized effort to
mainstream impact evaluation in the Bank. The objec-
tive is to improve the quality of the Bank’s operations,
strengthen country institutions for evidence-based
policy making, and generate knowledge in 15 develop-
ment areas.
With 185 completed studies and 280 active stud-
ies in 85 countries, the World Bank is attempting to
enhance and expand knowledge of the what and the
how of economic development by delivering precise
estimates of the cause-effect relationship between
policy action and outcomes.
The DIME approach centers on three aspects, in
a dramatic shift in the practice of evaluation. First,
DIME has been moving the evaluation practice from
external and ex post evaluations toward internal,
prospective, and operationally driven evaluations that
are externally validated through the use of state-of-
the-art methods. This framework promotes a results-
based model and allows governments to own and set
the research agenda, thus receiving just-in-time advice
on their most-pressing operational questions and gen-
uinely transforming the way they make decisions for
their programs.
Efforts to help improve access have met
with some success, but some questions
remain
Reducing schooling costs has helped increase
school enrollment
The driving focus of education policy mak-
ing in developing countries has been a push
to increase enrollments in primary and sec-
ondary schools. Interventions that reduce the
out-of-pocket costs of schooling have been
particularly successful.14 The reduction
in schooling costs can take many direct or
indirect forms. For instance, providing free
uniforms and textbooks and building more
classrooms in rural Kenya had a strong
GLOBAL MONITORING REPORT 2011
Second, DIME builds teams that combine both
operational and technical expertise. This ensures that
researchers work in close collaboration with project
teams from the planning stage onward to sustain
a process of prospective and operationally driven
knowledge generation. In this model, the project and
research teams work together to embed a learning
agenda in the project design.
Third, DIME organizes impact evaluations around
development areas and offers tailored programmatic
and strategic support. Cross-country events develop
regional communities of practice around certain sub-
themes, and teams share knowledge and experience
going beyond the impact evaluation agenda. This
ensures that all studies share a coherent and strategic
research agenda and that the results are policy relevant
and are disseminated to a wide audience of practitio-
ners. DIME sponsors 15 thematic impact evaluation
programs: access to infrastructure, active labor mar-
ket programs, agriculture adaptations, conditional
cash transfers, early childhood development, educa-
tion service delivery, energy mitigation, health systems
and results-based fi nancing, HIV/AIDS, fi nance and
private sector growth, forestry adaptations, institu-
tional reform, local development, malaria, and water
resource management adaptations.
Source: Legovini 2010.
impact on total years of schooling com-
pleted.15 Similarly, school feeding interven-
tions have increased school participation in a
variety of settings.16
A rich evidence base also shows the posi-
tive role of financial incentives in promoting
school participation in a variety of contexts.
This evidence includes the evaluation of Mex-
ico’s conditional cash transfer (CCT) pro-
gram that documented the efficacy of CCTs
as a mechanism for encouraging enrollment
and attendance.17 These results have been
replicated by many other researchers in many
other countries.18 In fact, evidence from CCT
programs in nine other countries (Bangla-
desh, Cambodia, Chile, Colombia, Ecuador,
GLOBAL MONITORING REPORT 2011 LINKING SPENDING AND OUTCOMES 79

MAP 3.1 The maternal mortality rate is declining only slowly, even though the vast majority of deaths
are avoidable
IBRD 38450
APRIL 2011
Maternal mortality

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Tajikistan
of Korea Japan
Monaco Greece
Gibraltar (UK) Cyprus Syrian Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
New
Dominican Puerto British Virgin
Poland Maternal mortality Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep.

Slovak Rep.
Maternal mortality ratio, per 100,000 live births
U.S. Virgin Islands Antigua and Barbuda
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary
≥ 500
and Nevis
Dominica Slovenia Romania 200–499
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and 100–199
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino 50–99

Montenegro Kosovo
Grenada FYR ≤49
Italy Macedonia
Trinidad Vatican Albania
R.B. de Venezuela
and Tobago City Greece no data

MDG performance

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Spain Turkey Armenia baijan Rep. of Korea
United States Portugal Turkmenistan Tajikistan Japan
Monaco Greece
Gibraltar (UK) Cyprus Syrian Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina MDG performance
New
Dominican Puerto British Virgin
Poland
MDG 5.A Reduce by three-quarters, Zealand
Germany

Republic Rico (US) Islands (UK)

between 1990 and 2015, the maternal
Ukraine

Anguilla (UK) Czech Rep.

U.S. Virgin Islands Antigua and Barbuda Slovak Rep. mortality ratio
(US) Austria
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Hungary
and Nevis Slovenia on target
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia close to target
(Neth) Bosnia and
Bonaire St. Vincent and
St. Lucia San Herz. Serbia
Aruba far from target
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino This map was produced by the Map Design Unit of The World Bank.
Montenegro Kosovo no data The boundaries, colors, denominations and any other information
Grenada FYR
Italy Macedonia shown on this map do not imply, on the part of The World Bank
Trinidad Vatican Albania Group, any judgment on the legal status of any territory, or any
and Tobago City Greece
R.B. de Venezuela endorsement or acceptance of such boundaries.

Source: World Bank staff calculations based on data from the World Development Indicators database.
80 LINKING SPENDING AND OUTCOMES
Honduras, Nicaragua, Pakistan, and Tur-
key) has consistently demonstrated signifi-
cant impacts of these programs on school
enrollment in the initial years of program
operation. Reducing user fees can similarly
increase enrollment.19 However, few of these
programs have been around long enough to
determine whether the impact is a short-term
effect of a novel project or is more lasting.
In addition, the higher enrollments induced
by these programs were not accompanied by
increased achievement.20
Some impact evaluations have shown that
improving school quality does not seem to
be a major inducement for increasing school
participation.21 Indeed, interventions improv-
ing the quality of education have, on aver-
age, generated no changes in participation.22
But much more evidence on this question is
needed before the results can be generalized.
Health input provision programs have to grapple
with uptake issues
All provision programs deal with the central
issue of how to get citizens to take up the
inputs and services they offer. In develop-
ing countries, health facilities are not always
accessible to poor, rural, and remote com-
munities. Other modes of delivery, such as
school-based and community-based health
interventions, have been popular. But we are
only beginning to learn how well such pro-
grams work and under what conditions.
Impact evaluations have shown that
schools can be an effective mode of delivery
for health input provision and can address
some uptake challenges because the families
do not have to be persuaded. Some (but not
all) school feeding programs have improved
children’s nutritional intake23 and health.
A recent study has shown improvements in
anthropometric outcomes of the younger
siblings of students who receive take-home
rations.24
Other school-based health programs have
also shown positive impacts. School-based
mass treatment with inexpensive deworm-
ing drugs in Kenya (where the prevalence of
intestinal worms among children is very high)
improved health not only among treated
GLOBAL MONITORING REPORT 2011
students but also among untreated students at
treatment schools and among untreated stu-
dents at nearby nontreatment schools, thanks
to reduced disease transmission. 25 Also in
Kenya, school-based intermittent preventive
treatment helped reduce anemia prevalence.26
The delivery of such treatment was estimated
to cost $2 per child treated per year, and the
estimated cost per anemia case averted was
$30. This type of intervention would be espe-
cially cost effective in areas with high rates of
malaria transmission.27
Cheap telecommunication technologies can
address uptake, especially in resource-limited
settings. An intervention in Kenya used text
messages to remind antiretroviral therapy
patients to adhere to the treatment guide-
lines—an important goal, given concerns of
widespread drug resistance when adherence
is poor. Weekly reminders increased the per-
centage of participants achieving 90 percent
adherence to the therapy by approximately
13–16 percent, compared with no reminder.28
They also reduced the frequency of treatment
interruptions.
Community-based interventions have also
become more popular, particularly as comple-
ments to facility-based care, linking commu-
nities with facilities-based services. Despite
showing great promise, community health
worker programs have had mixed results, as
reflected in the findings of one of the few rig-
orous impact evaluations of such programs
in Ethiopia. The Ethiopian program signifi-
cantly increased the proportion of children
fully immunized and the proportions of chil-
dren and women using insecticide-treated
bednets for malaria protection. But the effect
on prenatal and postnatal care was rather lim-
ited, as was the impact on the incidence and
duration of diarrhea among children under 5
years of age.29
Because community-based interven-
tions often come as a package comprising
input provision, information, advocacy, and
other components, it is hard to untangle the
impacts of the different components. Impact
evaluations may be useful in this; but, so far,
their number is quite limited. A meta-analysis
of health literature found that clean delivery
GLOBAL MONITORING REPORT 2011
had the most pronounced effect on reducing
maternal mortality. In comparison, building
community support and advocacy groups,
involving other family members through
community mobilization, or training com-
munity health workers and traditional birth
attendants had little or no impact on reducing
maternal mortality. But community interven-
tions affected perinatal mortality through dif-
ferent channels: community support groups,
advocacy through group sessions, and family
involvement in care were especially effective
in reducing perinatal deaths. Family involve-
ment in care also showed a positive impact in
reducing stillbirths. Additional impact evalu-
ations are needed to confirm these findings.
Other programs have tried to deal with
the uptake issue by combining demand-side
and supply-side interventions. An impact
evaluation of an immunization program in
India shows that whereas pure supply-side
improvements were associated with increases
in immunization, uptake rates were much
higher when supply-side improvements were
combined with modest demand-side incen-
tives in kind. 30 There are few comparative
studies of the relative impact on demand-side
stimulation versus supply-side responses. For
one of the few CCTs that combined inter-
ventions on both sides—Nicaragua’s Red de
Proteccion Social—the impact evaluation
was unable to untangle the demand-side and
supply-side effects.31
Cost sharing does not necessarily improve the
efficiency of health input subsidies
Many practitioners argue that for some types
of health inputs (particularly those requiring
the recipient to follow a treatment regime to
see health benefits), cost sharing can improve
the efficiency of the input subsidy. 32 In this
long-standing debate, others contend that
cost sharing dampens demand, especially
among the poor.
In Zambia, households paying a higher
price for a water treatment product were more
likely to report treating their drinking water
two weeks later.33 Likewise, controlled stud-
ies in several countries record improvements
in the use of services among poor people
LINKING SPENDING AND OUTCOMES 81
after copayments increased the transparency
and accountability of providers to poor cli-
ents. 34 In contrast, an impact evaluation in
Kenya fi nds that cost sharing does not seem
to improve targeting of insecticide-treated
bednets for malaria prevention to those in
greatest need, and that women who pay for
their bednets are no more likely to use them
than are those who receive them free.35 Cost
sharing also dampens demand considerably,
with uptake dropping by 75 percent when the
price of bednets increases from zero to $0.75
(from a 100 percent subsidy to an 88 percent
subsidy).
Another impact evaluation in Kenya
shows that introducing a small cost-sharing
component into a school-based deworming
program dramatically reduced the uptake of
deworming medication and raised little rev-
enue, relative to administrative costs. Nor did
the user fees help target treatment to the sick-
est students.36 Interestingly, one study shows
that uptake is particularly sensitive to price at
prices close to zero.37 In other words, uptake
is found to be highly sensitive to having a
positive price, but there is less evidence that
it is sensitive to variation within the positive
price range.
These fi ndings suggest the need for more
research, particularly to establish optimal
levels of subsidization for different health
inputs.38
CCT programs have often been effective in
reaching the poor
CCTs have traditionally been designed to tar-
get poor people, so it is not surprising that
a number of CCT programs have reduced
poverty. But the impact varies, and there is
still not much clarity about the conditions
under which CCTs will be most effective in
reducing poverty. Red de Proteccion Social
in Nicaragua and Familias en Accion in
Colombia show strong effects on poverty,
whereas Programa de Asignacion Familiar
in Honduras and Oportunidades/Progresa
in Mexico had significant but more modest
effects. Some of the larger CCTs from Bra-
zil, Jamaica, and Mexico have also shown
an impact on poverty at the national level.
82 LINKING SPENDING AND OUTCOMES
But the CCTs in Cambodia and Ecuador did
not affect median consumption or reduce
national poverty.39
In Ecuador, cash transfers improved cogni-
tive outcomes for the poorest children but not
for children somewhat better off.40 In poor
households, child work is a major cause of
school-age children dropping out of school.
Reduced child work by CCT beneficiaries
has been found in Brazil, Cambodia, Ecua-
dor, Mexico, and Nicaragua. In Cambodia,
for example, the average child receiving the
transfer was 10 percentage points less likely
to work for pay. Results on this have been
mixed, however, and more research is needed
to understand work’s impact on siblings—
especially if the number of CCTs targeting
individual children increases.
Despite being more likely to adopt
improved child care practices, the worst-off
households in Mexico had greater difficulties
translating these improvements into improved
nutritional outcomes—largely because of the
lack of complementary inputs among poorly
educated mothers, poor access to safe water,
and poorer quality nutrients.41
Incentives do not need to be large
Some impact evaluations have shown that
small benefits can often be enough to incen-
tivize the desired change in behavior, and
increasing the total size of the transfer has
only small marginal effects on service uptake
or behavior. In Cambodia, giving a child $45
quarterly to stay in school proved as effec-
tive as giving $60.42 Similarly, in Malawi, the
school participation effects of giving a house-
hold $5 were not significantly different from
giving $10. “[T]he key parameter in setting
benefit levels is the size of the elasticity of the
relevant outcomes to the benefit level.”43
Elasticity also varies across the type of
behavior being incentivized. In southwest
Tanzania, the group receiving $60 had reduc-
tions of sexually transmitted infections, but
the $30 group had the same infection rate as
the control group that received no payments.
Not surprisingly, the program was more effec-
tive for people from poorer and rural areas.
GLOBAL MONITORING REPORT 2011
Whether cash transfers should be
“conditioned” on certain behaviors is
context specific
Although CCTs have shown some positive
impacts on schooling and other outcomes,44
unconditional cash transfers have also
improved child health and increased school
participation.45 So, development practitioners
and policy makers have become very inter-
ested in whether the programs should be con-
ditioned on certain behaviors or not.
A study shows that some households in
Mexico and Ecuador did not realize that the
cash transfers they were getting were condi-
tional on school attendance; and, for these
households, school enrollment was signifi-
cantly lower than for those who thought that
the transfers were conditional.46
In Malawi, the effect of conditioning dif-
fered for different outcomes. For school par-
ticipation of adolescent girls, the impact of the
transfers was significantly greater when they
were conditioned on school attendance than
when not so conditioned. But they had little
effect on the likelihood of teenage pregnancies
or marriages, while unconditional cash trans-
fers were very effective in delaying marriage
and childbearing.47 Therefore, the answer to
the question of whether cash transfers should
be conditioned on certain behaviors appears
to be context specific—but, again, more
research is needed on the subject.
Providing information can be a highly cost-
effective way to change behavior
An impact evaluation from Madagascar
shows that providing information to youths
about returns to schooling improved children’s
school performance and attendance in the
first few months following the intervention.48
Similarly, providing information on returns
to schooling to boys in eighth grade increased
average years of schooling in the Dominican
Republic, although the program did not have
an impact on the poorest students.49
Providing information to adults has also
shown some promising results. In India,
informing households that their drink-
ing water is contaminated increases the
GLOBAL MONITORING REPORT 2011
probability that they start purifying their
water.50 In Bangladesh, informing households
that the water in their wells has an unsafe
concentration of arsenic raises the probability
that they will switch to another well. 51 But
information provision alone does not change
consumer behavior in all contexts. A study
from Kenya shows that providing consumers
information about the mortality and mor-
bidity from malaria or about the financial
gains from avoiding malaria infection had
no impact on the uptake of malaria control
devices.52 Similarly, evidence from the United
States has shown that information alone is
usually ineffective in changing risky health-
related behavior.53
The experience with translating information
and knowledge into HIV risk-reducing behav-
ior change has had mixed results, as the AIDS
literature suggests.54 There are, however, some
impact evaluations of behavioral interventions
that have shown a reduction in risky sexual
behavior. 55 In western Kenya, for example,
female students were warned about the high
HIV prevalence rates among older men and
they responded by dramatically reducing the
number of teenage childbirths with older men.
Similarly, helping girls stay in school by giv-
ing them a free school uniform reduced teen
pregnancy at a relatively low cost ($12 per girl)
when compared to the cost per teenage child-
birth averted ($750). Providing abstinence-
only information about teenage sexual behav-
ior had no impact on the likelihood of risky
behavior. But providing detailed information
on the risk of HIV led to a 28 percent decrease
in the likelihood that girls started childbearing
within a year—thus suggesting a reduction in
unprotected sex among those girls.56
Despite improvements in access, it has
been very difficult to improve learning
and health outcomes
Providing increased traditional schooling inputs
has often been ineffective in improving learning
outcomes
Attempting to fill narrowly defi ned resource
gaps in schooling by increasing the provision
LINKING SPENDING AND OUTCOMES 83
of traditional inputs has not been very suc-
cessful for improving learning outcomes. Tra-
ditional inputs that have been tested on this
dimension include textbooks, school meals,
blackboards and other visual aids (like fl ip
charts), teacher training, and even smaller
class sizes. 57 Some of these studies are dis-
cussed below.
Some example of such studies include one
in Kenya that found that providing textbooks
to students did not raise average test scores; it
raised only the scores of the best students.58
Also in Kenya, introducing complementary
learning aids such as flip charts to schools
had no impact on student performance. 59
Similarly, school feeding interventions have
had little or no impact on student perfor-
mance. 60 The Bolivian Social Investment
Fund had a significant impact on school
infrastructure but not on education outcomes
within the evaluation period. 61 An extra
teacher in rural Indian nonformal educa-
tion centers did not significantly improve test
scores (although this was not measured with
great precision).62 And, contrary to expecta-
tions, some studies have shown that simply
reducing pupil–teacher ratios does little for
student performance.63
In recent years, education practitioners have
experimented with nontraditional inputs—
mostly those to fill gaps left by teachers—and
technology-based inputs emerge as promis-
ing. A Nicaraguan program of radio instruc-
tion for students finds strong positive impacts
on mathematics performance.64 Computer-
assisted learning in urban India increased test
scores in mathematics.65 In another program in
Indian schools, an electronic machine or flash
card–based activities (to help teach English)
increased test scores in English.66 Computers
failed, however, to improve student perfor-
mance in a program in Colombia.67
Newer approaches toward remedial edu-
cation for poor-performing students have
also shown promise. A reading intervention
in rural India that gave four days of training
to community volunteers with grade-10 or
grade-12 educations to enable them to teach
children how to read significantly improved
reading.68
84 LINKING SPENDING AND OUTCOMES
CCTs help increase the uptake of services,
but their impact on health and learning
outcomes is mixed
A positive impact on health care utilization
(such as children’s visits to health centers)
was reported in Honduras, Jamaica, Mexico,
Nicaragua, and Paraguay (but not in Chile).69
Out of seven studies reporting immunization
results, significant and sizable impacts on
full immunization coverage (an intermediate
outcome) were found only in Nicaragua and
Turkey.70 In Mexico, however, the impact was
small and not significant—results ascribed to
the already high immunization rate at base-
line (above 90 percent).
The impact of CCTs on health and nutri-
tional outcomes is also mixed. One of the
few studies that reported health impacts was
Mexico’s Oportunidades/Progresa, where
children under 3 who received CCTs were
22 percent less likely to report an illness epi-
sode in the previous four weeks than were the
children in the comparison group. Children
young enough to be exposed to the program
for 24 months were 40 percent less likely to
be reported ill—a fi nding that suggests the
program generated cumulative health bene-
fits. Conversely, no effect on child height was
reported among children of any age in Brazil,
Ecuador, Honduras, and Nicaragua;71 and, in
Colombia, among children ages 3–7 years.72
Where studies have reported positive institu-
tional impacts, the impacts have been larger
among younger children (that is, younger at
the time of the baseline survey—in particu-
lar, younger than 2 years at baseline). One of
the few CCTs that addressed maternal health
outcomes, Janani Surksha Yojana in India,
had a small impact on the uptake of prena-
tal care; a large, positive impact on institu-
tional deliveries; and a smaller effect on home
delivery with a skilled birth attendant. There
was also some evidence of a lower probability
of perinatal and neonatal deaths, but not of
maternal deaths.73
Although the positive impact of CCTs
in expanding access to education is well
documented,74 evidence on the impact of edu-
cational transfers (in-kind or cash transfers)
on learning outcomes is not as encouraging.75
GLOBAL MONITORING REPORT 2011
One example is a small cash transfer program
in Malawi’s Zomba district, where the trans-
fers improved school enrollment and atten-
dance but did not significantly improve learn-
ing variables (which included a self-report on
English literacy and a teacher’s evaluation of
student progress).76 The lack of any discern-
ible effect on learning outcomes (despite large
impacts on school enrollment) may partly be
caused by their drawing lower-ability stu-
dents back to school.77
In a similar vein, CCTs have had a positive
impact on the uptake of growth monitoring
services.78 But the impact on growth indica-
tors has been mixed, and the positive impacts
were generally modest.79 CCTs in Colombia,
Mexico, and Nicaragua were accompanied
by a substantial positive impact on linear
growth,80 although no impact was found in
Brazil81 or Honduras.82 Nonetheless, despite
the difficulty of cross-study comparisons
(because of differences in age groups, expo-
sure, and program design), it can be concluded
that programs with larger cash transfers (such
as those in Colombia, Mexico, and Nicara-
gua, where transfers represented 15–25 per-
cent of total household expenditures) tend to
have the largest impact. Younger age groups
are likely to benefit more (consistent with the
nutrition literature), and the effects are larger
for height than for weight indicators.83
Only three of the CCT program evalua-
tions (Honduras, Mexico, and Nicaragua)
looked at the impact on micronutrient sta-
tus. In Mexico, after one year, beneficiary
children had higher mean hemoglobin levels
and significantly lower rates of anemia than
did nonbeneficiaries. 84 But nearly half the
children under 1 year were still anemic after
one year of exposure to the intervention.
No effect was found for the older children,
and no differences were observed for other
micronutrients (such as iron, vitamin A, and
zinc). The modest impacts on micronutrient
status were ascribed to low use or uptake of
the fortified foods (Mexico)85 and supple-
ments (Nicaragua), 86 sharing foods with
other beneficiary household members, over-
dilution of the product, and program design
weaknesses.87
GLOBAL MONITORING REPORT 2011 LINKING SPENDING AND OUTCOMES 85

MAP 3.2 Each year of a girl’s education reduces, by as much as 10 percent, the risk of her children dying
before age five
IBRD 38447
APRIL 2011
Gender parity (primary)

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Tajikistan
of Korea Japan
Monaco Greece
Gibraltar (UK) Cyprus Syrian Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
Gender parity (primary) New
Dominican Puerto British Virgin
Poland Percentage of girls to boys enrolled at Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep. primary level in public and private schools
U.S. Virgin Islands Antigua and Barbuda Slovak Rep.
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary
<79.9
and Nevis
Dominica Slovenia Romania 80–89.9
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and 90–94.9
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino 95–99.9

Montenegro Kosovo
Grenada FYR ≥100
Italy Macedonia
Trinidad Vatican Albania
R.B. de Venezuela
and Tobago City Greece no data

MDG performance

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Monaco Tajikistan of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina MDG performance
New
Dominican Puerto British Virgin
Poland
MDG 3.A Eliminate gender disparity in Zealand
Germany

Republic Rico (US) Islands (UK)

primary education, preferably by 2005,
Ukraine

Anguilla (UK) Czech Rep.

U.S. Virgin Islands Antigua and Barbuda Slovak Rep. and at all levels of education no later than 2015
(US) Austria
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Hungary
and Nevis Slovenia on target
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia close to target
(Neth) Bosnia and
Bonaire St. Vincent and
St. Lucia San Herz. Serbia
Aruba far from target
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino This map was produced by the Map Design Unit of The World Bank.
Montenegro Kosovo no data The boundaries, colors, denominations and any other information
Grenada FYR
Italy Macedonia shown on this map do not imply, on the part of The World Bank
Trinidad Vatican Albania Group, any judgment on the legal status of any territory, or any
and Tobago City Greece
R.B. de Venezuela endorsement or acceptance of such boundaries.

Source: World Bank staff calculations based on data from the World Development Indicators database.
86 LINKING SPENDING AND OUTCOMES
Nutritional improvements are expected to
flow from the increased consumption arising
from the income effect of the cash transfer
and the better practices (such as breastfeed-
ing, proper weaning, growth monitoring, and
consumption of nutritious foods) that arise
from health education during growth moni-
toring. The relative contribution of health
education to each of these practices has not
been assessed. The majority of impact evalu-
ations have found that CCTs may dispropor-
tionately affect the consumption of particular
items, such as food. It has been hypothesized
that CCTs increase the bargaining power of
women within the household, and that this
drives the greater food expenditure.88 There
is also some evidence of changes in diet com-
position. Not only do households increase
dietary diversity, but they also shift toward
higher-quality sources of calories. In Nicara-
gua, households that receive transfers from
the Atencion a Crisis program spend sig-
nificantly less on staples and more on animal
protein, fruits, and vegetables.89
Identifying the reasons for increased use of
health or education services is complicated.
Sometimes it rises because services are physi-
cally more accessible. This is likely the case
for such low-cost health services as bednets
and treatment for sexually transmitted infec-
tions where the nonservice costs of use—
particularly transport and perhaps facility
search costs—are a larger share of cost to the
consumer than is the service cost. In educa-
tion, a crucial element is always likely to be
the opportunity cost to households (the loss
in earnings from sending children). A fur-
ther reason for increased uptake is that use
is linked to finance, and thus it improves the
providers’ incentive to increase the quantity
of services.90
Intervening early in a child’s life can produce
strong impacts
Evidence suggests that education and health
programs targeting young children can have
strong impacts on overall human develop-
ment outcomes. Some of the most compel-
ling evidence for this comes from Guate-
mala, where nutritional intervention and
GLOBAL MONITORING REPORT 2011
micronutrient supplementation before 3 years
of age showed beneficial effects on school-
ing, reading, and intelligence tests in adult-
hood (25– 42 years). 91 Some evaluations
show significant improvements in cognitive
and learning outcomes among children who
benefited from CCT programs before they
entered school.92 At every level of income,
households with young children receiving the
cash transfers were more likely to read, tell
stories, and sing to their children and to have
books, paper, and pencils for them to use at
home.93 This is an important result because
early cognitive development was a strong pre-
dictor of school attainment in Brazil, Gua-
temala, Jamaica, the Philippines, and South
Africa, even after controlling for wealth and
mother’s education.94
Children who qualify for CCTs benefit
most from schooling at an early age. In Ecua-
dor, most children at age 3 in the sample were
only modestly behind the reference popula-
tion on a test of cognitive development.95 By
age 6, however, when they entered first grade,
children in the two poorest deciles of the
national distribution of wealth were almost
three standard deviations behind where they
should be—and have almost no chance of
catching up. Remedial investments targeting
them therefore need to make equity–efficiency
tradeoffs; investments in early childhood are
more likely to avoid such tradeoffs.96 Simi-
larly, the results reported above on the impact
of nutrition programs on growth and micro-
nutrient status suggest larger impacts among
small children. Despite this evidence, there
is some debate over which age group CCTs
should target to ensure that school-age chil-
dren also benefit.97
Service delivery often fails the poor
A recent study reports results from surveys in
which enumerators made unannounced visits
to primary schools and health clinics in Ban-
gladesh, Ecuador, India, Indonesia, Peru, and
Uganda. They recorded whether they found
teachers and health workers in the facilities.98
On average, about 19 percent of teachers and
35 percent of health workers were absent, and
many teachers and health workers in their
GLOBAL MONITORING REPORT 2011
facilities were not working. Across Indian
government-run schools, only 45 percent of
teachers assigned to a school were engaged
in teaching at any given time. In Ghana,
Morocco, Tunisia, and the Brazilian state of
Pernambuco99 the instructional time teachers
allocated to learning tasks ranged from 78
percent in Tunisia to 39 percent in Ghana.
Observational data for a sample of doc-
tors in New Delhi, India, showed differences
between the levels of expertise and quality
of care provided among private doctors who
serve the rich and the poor. Poorer patients
receive low-quality advice and spend a fair
amount of money on unnecessary (and often
substandard) drugs. Wealthier patients get
better advice, both because they see more
competent providers and because their pro-
viders put in more effort.100
Why are incentives weak and accountabil-
ity low among service providers in develop-
ing countries? One reason is the highly cen-
tralized and bureaucratic education and
health systems. Hiring, salaries, and pro-
motion decisions are made at the center,
determined largely by educational qualifica-
tions and seniority, with almost no scope for
performance-based pay. Governments fi nd
it difficult to monitor the performance of
health workers, especially those providing
highly discretionary services such as clini-
cal care. Furthermore, teachers and health
workers are typically organized interest
groups that can be politically influential.
These factors imply that disciplinary action
for poor performance is rare and that teach-
ers and health workers are almost never
fired. In addition, asymmetric informa-
tion between client and provider (especially
strong for health services) makes account-
ability difficult.
These problems are almost never addressed
through the long route of accountability—
through political pressure that consumers
exert on the government. One possible rea-
son poor performance of service providers
is not on the political agenda: providers are
an organized interest group, and clients, par-
ticularly in health, are diffuse. Those who
are poor enough to use public schools and
LINKING SPENDING AND OUTCOMES 87
public clinics have less political power than
do middle-class teachers and health workers.
In many countries, even those moderately
well off send their children to private schools
and use private clinics. Even when part of the
population chooses private providers instead
of public ones, public money keeps flowing
into public schools and hospitals. Hence, the
cycle of weak accountability and weak incen-
tives continues.
New approaches are being designed
to improve the critical link of service
delivery
As seen in figure 3.4, service delivery is the
link between generation and consumption of
goods and services. Empirical evidence from
microeconomic studies has shown that this
link is often weak in developing countries—
an important reason why public spending on
inputs and demand-side interventions does
not translate into commensurate human
development outcomes. What explains the
service delivery weaknesses?
The following issues stand out: inequita-
bly low allocations to services reaching low-
income groups, leaks of funding between
central ministries and frontline providers, and
failures of frontline providers such as teach-
ers and doctors to perform effectively. Impact
evaluations have highlighted and explored
solutions on the last of those three points.101 It
has been argued that frontline service provid-
ers’ weak incentives and low accountability in
developing countries often translates into inef-
fective service delivery.102 New service delivery
approaches attempt to solve the incentive and
accountability issues while reducing the need
for (onerous) monitoring by the government
and the citizenry. These approaches can be
classified under three headings: information
for accountability, greater citizen accountabil-
ity and autonomy in service provision, and
pay for performance.103
Information to increase accountability can be
effective in some contexts
To hold their service providers accountable,
poor people need information on their rights
88 LINKING SPENDING AND OUTCOMES
and on how well their service providers are
performing. Furthermore, availability of
information on service delivery performance
provides the means to monitor progress. In
recent years, programs have been designed to
provide citizens with this information in the
hope that it will enable them to hold service
providers accountable. This has been easier
to do in education than in health because of
the nature of the services.104
Citizen report cards provide clients with
simple information on how well local ser-
vice providers are doing. In Pakistan, pro-
viding parents with report cards containing
information about the relative performance
of children and schools in the village (includ-
ing private schools) improved student perfor-
mance in public schools and lower-quality
private schools and reduced fees at higher-
quality private schools.105
Elsewhere, impact evaluations of similar
programs have shown less direct results. For
example, a Liberian program that publicized
to parents the results of an early-grade reading
assessment and showed teachers how to pre-
pare quarterly report cards for parents showed
very little impact on learning after two years.
But when the information on student reading
skills was combined with intensive teacher
training, student performance improved dra-
matically.106 Similarly in Chile, publicizing
rankings of school quality by region did not
appear to affect school performance.107
A large information campaign in Uganda
used school display boards and newspapers
to provide information to parents and com-
munities on the exact amount of operational
funding each school could expect and the
date when the funding transfer to the school
would be made. The campaign was associ-
ated with a sharp reduction in the leak of
school grants expenditures.108 The research-
ers also documented that schools in districts
with higher media exposure experienced
greater increases in enrollments and higher
test scores on the primary-school exit exam
than did schools in districts with lower media
exposure.
Another dimension of information for
accountability, tested in two studies in India,
GLOBAL MONITORING REPORT 2011
yielded mixed results. In both studies, villag-
ers were provided with information about
their rights and responsibilities for educa-
tion provision and oversight. One part of the
country showed no impact from providing
information alone,109 and a different part of
the country showed some impact on student
learning through improved service provision
by teachers.110
It seems clear that, although providing
information for accountability to citizens
may be important, it is ineffective to sim-
ply give communities information on school
quality without also increasing their ability
to take action.
Greater citizen accountability and autonomy in
service provision show promise
Parents and community leaders have informa-
tion about local service providers and local
service delivery that centralized systems tend
to ignore. Involving them in decision making
with system actors (teachers, head teachers,
doctors, and nurses) can better align spend-
ing with local needs. Greater autonomy and
accountability of local service delivery can
increase incentives to adopt proven successful
practices; evaluate the effectiveness of home-
grown initiatives; and build a sense of com-
mitment, ownership, and pride. But there are
also risks, including limited information, nar-
row interests, elite capture, and inadequate
representation of the disadvantaged. Increas-
ingly, development practitioners are experi-
menting with ways to increase the autonomy
of local stakeholders in service provision.
Again, this model has been evaluated more in
education than in health.
One way to increase accountability is to
give local communities resources and train-
ing to manage service provision, an approach
tried in school-based management programs
that give local communities decision-making
power and resources for school management.
Studies show a positive impact on how schools
are managed and how teachers, head-teachers,
and parents interact, but they reveal no consis-
tent improvement in student performance.
For example, school-based management
in Mexico has a positive impact on teacher
GLOBAL MONITORING REPORT 2011
behavior and school management,111 but lit-
tle impact on student performance.112 A simi-
lar program in Nepal showed a significant
impact on access and equity; the impact on
school governance measures was mixed, with
regional variation in outcomes; and there was
no evidence that the changes were associated
with improvements in learning outcomes.113
There has been considerable work on hos-
pital autonomy and the impacts of decentral-
ized management on hospital performance,
but the analyses have rarely had any controlled
or quasi-experimental design to control for a
counterfactual. This is partly because hos-
pital autonomy is usually implemented with
many other management reforms, making it
difficult to isolate autonomy from manage-
ment capacity and system improvements.
Another approach is to give clients more
control over service providers. In western
Kenya, giving parents stronger oversight
over teachers improved student performance
when combined with other reforms. And the
effect on student performance of hiring extra
teachers can be greater when school commit-
tees are given training on how to supervise
and manage teachers; the effect was largest
among the students assigned to a contract
teacher (as opposed to a civil servant). In
India, local communities’ hiring of contract
teachers (who were younger and less quali-
fied) at lower salaries than those received by
regular teachers by improved student perfor-
mance.114 But very little is known about the
long-term effects of contract teachers, and
such a system is unlikely to be sustainable
over a long period.
Again, the evidence on school-based
management is inconclusive. More impact
evaluations are needed, particularly on the
pathways that translate this kind of decen-
tralization into better school quality.
Pay for performance holds great promise, but
more evidence is needed
Performance-based bonuses that reward
schools and teachers for improving student
outcomes have been introduced in diverse set-
tings (such as India, Israel, and Kenya), and
all have positive impacts on student learning
LINKING SPENDING AND OUTCOMES 89
outcomes. In some cases (such as in India),115
individual bonuses led to larger improve-
ments in student outcomes, whereas group
bonuses had lower implementation costs.
That suggests some cost–benefit trade-offs
between the two. In Chile’s National System
of School Performance, group bonuses also
yielded quite modest impacts. In more detail,
one evaluation of the system found a modest
cumulative positive effect on student achieve-
ment for schools that had a higher probability
of winning the bonus,116 and a positive effect
on student test scores.117
Some evaluations suggest uncertainty
about the duration of benefits. In Kenya,
group-based incentives for teachers improved
student performance but the gains were
short-lived.118 Other settings suggest that the
targets are important. In the Brazilian state
of Pernambuco, during the first year, schools
with more ambitious targets made signifi-
cantly larger test score gains than did simi-
larly performing comparison schools assigned
lower targets. In the second year—with con-
trols for schools’ 2008 test results and other
school characteristics—schools that barely
missed the threshold for getting the bonus in
2008 improved more than schools that barely
achieved it. It appears that both higher targets
and barely missed bonus achievement created
incentives that had a positive effect on school
motivation and performance.119
Two other evaluated programs rewarded
teachers for attendance. One allowed school
heads in rural Kenya to give individual teach-
ers bonus pay for regular attendance (mea-
sured by unannounced random visits).120
But they simply distributed the full bonus to
all teachers, regardless of attendance. The
inability or unwillingness of the head teacher
to enforce the performance bonus to reward
regular attendance explained the lack of
impact on attendance as well as the absence
of change in teacher pedagogy, pupil atten-
dance, or pupil test scores.
A program in rural India, however, pro-
duced very different results.121 In randomly
selected rural schools run by nongovern-
mental organizations, a schedule of monthly
teacher bonuses and fines based on attendance
90 LINKING SPENDING AND OUTCOMES
was monitored with daily date-stamped and
time-stamped photographs. The maximum
bonus for a teacher with no days absent was
about 25 percent of a month’s salary. The
program had a dramatic effect on teacher
absenteeism over three years. Although there
were no observed changes in teachers’ class-
room behavior and pedagogy (other than
greater presence), student test scores and
rates of graduation to the next level of educa-
tion rose significantly. The program was also
quite cost effective.
In health care, paying for performance
is designed to provide fi nancial rewards for
providers who increase service delivery and
improve the quality of care. To date, the
experience has been promising, but there is
little evidence from evaluations using cred-
ible comparison groups—in fact, a recent
review of the literature finds methodologi-
cal limitations that constrain the ability to
interpret the results as causal impacts of pay
for performance.122 Several studies without
comparison groups found increases in service
delivery indicators, such as immunization
and attended deliveries (as in Haiti),123 and
in the number of curative consultations and
institutional deliveries (as in early pilot pro-
grams in Rwanda).124
A quasi-experimental study in Cambo-
dia found service delivery improvements
among contracted providers, but the provid-
ers received significantly more resources than
did the control groups—suggesting that it
was potentially the additional resources (the
resource effect) rather than pay for perfor-
mance (the incentive effect) that explained
these findings.125 This raises an important
policy issue: if pay for performance achieves
its results from increased financial resources
rather than incentives, the same results could
be achieved from an increase in traditional
inputs, and there would be no reason to incur
the administrative costs associated with pay
for performance.
The only impact evaluation in a low-
resource setting that has been able to separate
the incentive effect from the resource effect is
a recent one of the Rwanda health center pay-
for-performance program targeting maternal
and child health outcomes. The incentive
GLOBAL MONITORING REPORT 2011
effect was isolated from the resource effect by
increasing comparison facilities’ budgets by
the average payments made to the treatment
facilities. The evaluation shows the greatest
impact on those services that had the high-
est payment rates (institutional deliveries)
and that needed the lowest provider effort
(preventive care visits by young children).126
Financial performance incentives improved
both the use and quality of health services.
Future directions
Development practitioners need to do much
more rigorous empirical work—particu-
larly, impact evaluations—to come closer to
answering critical questions of development
effectiveness. But the start has been promis-
ing. Indeed, a recent review of CCTs concludes
that no new research is needed on whether
households—particularly, poor households—
respond to conditions or incentives.127
Other questions remain unresolved or
underaddressed—for example, the size of the
incentive and its influence on the size of the
impact,128 complementary supply-side inter-
ventions or investments, payment frequency,
means of payment, and other features of pro-
gram design (such as how frequently condi-
tions should be monitored, the gender of the
cash transfer recipient, and whether to penal-
ize noncomplying households).
A systematic base of impact evaluations
of different interventions, in different con-
texts, will go a long way in moving toward
evidence-based decision making and in mak-
ing public spending more effective to close
the remaining gaps in education and health
outcomes in developing countries. Some top-
ics, such as maternal mortality, are under-
represented in the impact evaluation litera-
ture—a critical shortcoming given that this
coincides with the MDG that is least likely
to be achieved. Also needed is more work on
designing impact evaluations that have a basis
in theory and provide useful information on
whether and why programs work.
The evidence suggests that service delivery
for education and health is weak in develop-
ing countries. But very little is known about
the best ways to measure and strengthen this
GLOBAL MONITORING REPORT 2011
critical link in the results chain. Exploring
new and different approaches to measure and
improve service delivery is one of the most
promising areas for future work—especially,
comparative evaluations that assess alterna-
tive models of implementation.
Cost and cost effectiveness should be an
explicit part of evaluation design. There rarely
is discussion of the costs to achieve particular
impacts. What magnitude of impact justifies
the cost, or is it impact at any cost? Informa-
tion to implement at scale is often missing,
with no indication of the institutional invest-
ments to feasibly implement smaller experi-
ments at scale. This lack of information on
program costs and investments hampers deci-
sion making and implementing at scale.
More work is also needed on the politi-
cal economy surrounding the use of empiri-
cal evidence to inform policy. Should donors
invest more in impact evaluation and inter-
vention design to improve political incen-
tives and government interventions? How
can governments be encouraged to pursue
policies that strengthen service delivery (by
improving the incentives of providers, among
other things)? Some evidence on these issues
is emerging. For example, enabling less-
educated people in Brazil to use electronic
voting technologies increased their political
participation, shifted public spending toward
public health care, improved service use by
less-educated mothers, and thus reduced low-
weight births.129 Public spending on primary
education rose in Africa when countries
moved to greater multiparty competition.130 A
similar association between electoral compe-
tition and education spending has been found
in Indian states.131 But mobilizing communi-
ties may have little impact on public provider
accountability if communities are severely
constrained in taking public action.132
Interest is growing in demand-side financ-
ing approaches and more explicit use of
incentives for service providers to improve
performance. On the demand side, the mas-
sive increase in CCTs has improved human
development outcomes. Similarly, vouchers
received increased prominence in health and
education. On the supply side, performance-
based financing and pay for performance
LINKING SPENDING AND OUTCOMES 91
have improved the performance of service
delivery units in education and health.
Policy makers are realizing that continu-
ing to spend ever-greater funds on health
and education without quality improvements
will neither bring their countries closer to the
MDGs nor greatly improve human develop-
ment outcomes among poor people. More
supply-side subsidies for health and edu-
cation services are not always the answer.
The problems of supply-side dominance are,
among others, weak targeting of the poor,
lack of consumer choice, absence of links
between provider payment and performance,
weak incentives for service quality, and
weak accountability to consumers. Supply-
side effects have dominated planning—and
too many multilateral development banks,
including the World Bank, are guilty of this.
Resource-needs projection models too often
ignore the evidence suggesting a tenuous rela-
tionship between increased health expendi-
ture and outcomes.
The stronger and more explicit focus on
incentives in the health and education lit-
erature is encouraging. The modest human
development results do not stem from a short-
age of technical solutions. But a principal
finding of this review is that simply increasing
the size of interventions may not be enough
to make adequate progress. Even where
access and use have been expanded, human
development outcomes have not necessarily
improved (as the experience with CCTs sug-
gests). Establishing appropriate incentives for
suppliers and consumers, ensuring adequate
provision of services to meet demand, ensur-
ing that suppliers are accountable to consum-
ers for the quality of service, and providing
sufficient resources to poor consumers are all
necessary to have an appreciable impact on
human development outcomes.
Notes
1. See, for example, Filmer, Hammer, and
Pritchett (1998) and Burnside and Dollar
(1998). Baldacci, Guin-Siu, and de Mello
(2002) conclude that the links between
outcomes and public spending are stron-
ger for education than for health. Gupta,
92 LINKING SPENDING AND OUTCOMES GLOBAL MONITORING REPORT 2011

Verhoeven, and Tiongson (2003) disaggre- 26. Clarke et al. 2008.

gated the impact on the outcomes of the 27. Temperley et al. 2008.
poor, and found (as did Bidani and Rival- 28. Pop-Eleches et al. 2011.
lion [1997]), that the poor have worse health 29. Admassie, Abebaw, and Woldemichael
outcomes than the nonpoor and that public 2009.
spending has a larger impact on the health 30. Banerjee et al. 2010.
outcomes of the poor than the nonpoor. 31. Regalía and Castro 2009.
2. “Basic immunization” here refers to diph- 32. For a detailed review of this debate, see
theria, pertussis, and tetanus vaccination. Kremer and Holla (2008).
Median coverage in low-income countries 33. Ashraf, Berry, and Shapiro 2007.
increased from 62 percent to 81 percent 34. World Bank 2003.
between 2000 and 2008 (WHO 2010). 35. Cohen and Dupas 2010.
3. Hanushek and Woessmann 2008. 36. Kremer and Miguel 2007.
4 Pratham Organization 2005. 37. Ibid.
5. WHO 2008. Full immunization refers to 38. In this regard, the vast body of health financ-
basic immunization plus measles and polio ing and, specifically, the health insurance
vaccination. literature (although not explicitly captured
6. WHO 2010. in this chapter) is an important source of
7. World Bank/AERC 2010. information.
8. See, for example, Van de Walle (1995), 39. Fiszbein and Schady 2009.
Castro-Leal et al. (1999), Mahal et al. 40. Paxson and Schady 2007.
(2000), Sahn and Younger (2000), and 41. Barber and Gertler 2010.
O’Donnell et al. (2007). 42. Filmer and Schady 2009.
9. A complete discussion of impact evaluation 43. World Bank 2009, p. 182.
methodologies can be found in Gertler et al. 44. Schultz 2004; de Janvry, Final, and Sadoulet
(2010). 2006; Filmer and Schady 2010.
10. See, for example, Rodrik (2008), Ravallion 45. Edmonds and Schady 2009; Edmonds 2006;
(2009), Deaton (2009), Sims (2010), and Case, Hosegood, and Lund 2005; Duflo
Angrist and Pischke (2010). 2003.
11. Deaton 2009. 46. de Brauw and Hoddinott 2008; Schady and
12. Ibid. Araujo 2008.
13. See Kremer and Zwane (2007) for a review of 47. Baird, McIntosh, and Özler 2011.
water and sanitation literature on preventing 48. Nguyen 2008.
diarrheal diseases. 49. Jensen 2010.
14. Kremer and Holla 2009. 50. Jalan and Somanathan 2008.
15. Kremer, Moulin, and Namunyu 2003. 51. Madajewicz et al. 2007.
16. Vermeersch and Kremer 2004; Kazianga, 52. Dupas 2009.
de Walque, and Alderman 2009; Meng and 53. Downs, Loewenstein, and Wisdom 2009;
Ryan 2010; Powell et al. 1998. Davis et al. 2009.
17. Schultz 2004. 54. Bertrand et al. 2006; Medley et al. 2009.
18. See, for example, Cardoso and Souza (2004), 55. Duflo et al. 2006.
Levy and Ohls (2007), Barrera-Osorio et al. 56. Dupas 2006, 2009.
(2008), and Filmer and Schady (2008). 57. For a full review, see Kremer and Holla
19. Barrera-Osorio, Linden, and Urquiola 2007; (2009).
Borkum 2009. 58. Glewwe, Kremer, and Moulin 2007. The
20. Hanushek 2008. authors argue that problems with the edu-
21. See the review in Kremer and Holla (2009). cation system as a whole constrained the
22. It should be noted that a recent study (not an impact of increasing inputs. For example,
impact evaluation) from Egypt (Hanushek, textbooks are written in English (most stu-
Lavy, and Hitomi 2008) has shown that dents’ third language) and many students
school dropout decisions are very responsive could not use them effectively. More gener-
to the quality of the school. ally, the curriculum in Kenya and in many
23. Afridi 2007; Jacoby, Cueto, and Pollitt 1996 other developing countries tends to be ori-
24. Kazianga, de Walque, and Alderman 2009. ented toward academically strong students.
25. Vermeersch and Kremer 2004. 59. Glewwe et al. 2004.
GLOBAL MONITORING REPORT 2011
60. Vermeersch and Kremer 2004; Kazianga, de
Walque, and Alderman 2009.
61. Newman et al. 2002.
62. Banerjee et al. 2005.
63. Duflo, Dupas, and Kremer 2007; Kremer,
Moulin, and Namunyu 2003; Banerjee et al.
2005; Banerjee et al. 2007.
64. Jamison, Searle, Galda, and Heyneman 1981.
65. Banerjee et al. 2007.
66. He, Linden, and MacLeod 2007.
67. Barrera-Osorio and Linden 2009.
68. Banerjee et al. 2010.
69. Chile (Galasso 2006); Honduras (Morris et
al. 2004); Jamaica (Levy and Ohls 2007);
Mexico (Gertler and Boyce 2001); Nicara-
gua (Maluccio and Flores 2005); Paraguay
(Soares, Ribas, and Hirata 2008).
70. Nicaragua (Barham and Maluccio 2008);
Turkey (Ahmed et al. 2007).
71. Nicaragua (Macours, Schady, and Vakis
2008); Honduras (Hoddinott 2008); Brazil
(Morris et al. 2004); Ecuador (Paxson and
Schady 2008).
72. Attanasio et al. 2005.
73. The increase in institutional deliveries and
a smaller increase in home delivery with a
skilled birth attendant suggest that part of
the increase in the number of births in facili-
ties resulted from shifting births that other-
wise would have occurred at home with a
skilled attendant (Lim et al. 2010).
74. Among others, see Schultz (2004), Cardoso
and Souza (2004), Levy and Ohls (2007),
Barrera-Osorio et al. (2008), and Filmer and
Schady (2008).
75. Miguel and Kremer 2004; Glewwe, Kremer,
and Moulin 2007.
76. Baird et al. 2010.
77. Filmer and Schady 2009.
78. Growth monitoring services include weighing
children at regular intervals during the fi rst
few years after birth and tracking growth
against expected growth at a given age.
79. Mexico (Behrman and Hoddinott 2001;
Gertler 2004; and Rivera et al. 2004);
Colombia (Mesnard 2005); Nicaragua
(Maluccio and Flores 2005); Colombia
(Attanasio et al. 2005).
80. Rivera et al. 2004; Attanasio et al. 2005;
Maluccio and Flores 2005.
81. Morris et al. (2004).
82. Caldés, Coady, and Maluccio 2006.
83. It is curious that weighing and growth
monitoring featured so prominently in the
CCTs because the epidemiologic evidence of
LINKING SPENDING AND OUTCOMES 93
the impact of growth monitoring on nutri-
tional outcomes is weak. This may explain
the mixed fi ndings. “Available evidence on
growth monitoring was not sufficient to sup-
port its use alone (without adequate nutri-
tion counseling and referrals) as an essential
nutrition support” (Bhutta et al. 2008, p.
429). See also Roberfroid et al. (2005); Gar-
ner et al. (2000); and Ashworth, Shrimpton,
and Jamil (2008).
84. Rivera et al. 2004; Gertler 2004.
85. Behrman and Hoddinott 2001.
86. Adato and Roopnaraine 2004.
87. Leroy, Marie, and Verhofstadt 2009.
88. Schady and Rosero 2008.
89. Macours, Schady, and Vakis 2008.
90. Other ways are available to increase incen-
tives facing providers by changing the way
in which budgets or provider payments are
structured. Thus, although improving incen-
tives may be a useful side effect of voucher
systems, it may be quite a costly option.
91. Behrman and Hoddinott 2001.
92. Ecuador (Paxson and Schady 2008); Nica-
ragua (Macours, Schady, and Vakis 2008).
93. Macours, Schady, and Vakis 2008.
94. Grantham-McGregor et al. 2007.
95. Paxson and Schady 2008.
96. This is consistent with the conclusion reached
by Cunha and Heckman (2010), as well as
a recent World Bank publication on early
childhood development (Alderman 2011).
97. Worldwide, a worrying dropout occurs in the
transition to secondary school. Attanasio et
al. (2005) argue that eliminating the funding
transfers to children in grade six and below
and using those resources to increase the size
of the transfer to children in grade seven and
beyond would double school participation
among the older children, with no effect on
school participation by younger ones.
98. Chaudhury et al. 2006.
99. Abadzi 2009.
100. Das and Hammer 2005.
101. A detailed discussion is in World Develop-
ment Report 2004 (World Bank 2003).
102. World Bank 2003.
103. This classification comes from the recent
work on school accountability done by
Bruns, Filmer, and Patrinos (2011).
104. The most important differences between
education and health services are because
of information asymmetry and the relative
infrequency of contact between health pro-
viders and their patients.
94 LINKING SPENDING AND OUTCOMES
105. Andrabi, Das, and Khwaja 2009.
106. Piper and Korda 2010.
107. Mizala, Romaguera, and Urquiola 2007.
108. Reinikka and Svensson 2005, 2006; Björk-
man 2006; Björkman and Svensson 2009.
109. Banerjee et al. 2010.
110. Pandey et al. 2010.
111. Banerjee et al. 2010.
112. Skoufi as and Shapiro 2006; Gertler, Patri-
nos, and Rubio-Codina 2006.
113. Chaudhury and Parajuli 2010.
114. Muralidharan and Sundararaman 2009;
Goyal and Pandey 2009.
115. Muralidharan and Sundararaman 2009.
116. Mizala, Romaguera, and Urquiola 2007.
117. Gallego 2008.
118. Glewwe, Ilas, and Kremer 2003.
119. Ferraz and Bruns forthcoming.
120. Kremer and Chen 2001.
121. Duflo, Hanna, and Ryan 2010.
122. Eldridge and Palmer 2009.
123. Eichler et al. 2007.
124. Meessen, Kashala, and Musango 2007;
Meessen et al. 2006; Soeters, Habineza, and
Peerenboom 2006.
125. Schwartz and Bhushan 2004.
126. Basinga et al. 2010.
127. Gaarder, Glassman, and Todd 2010.
128. Filmer and Schady (2009), in the context
of education enrollment, conclude that
there are diminishing returns to the size of
incentives.
129. Fujiwara 2010.
130. Stasavage 2005.
131. Khemani 2010.
132. Banerjee et al. 2010.
References
Abadzi, H. 2009. “Instructional Time Loss in
Developing Countries: Concepts, Measure-
ment, and Implications.” World Bank Research
Observer 24 (2): 267–90.
Adato, M., and T. Roopnaraine. 2004. “Sistema
de evaluación de la Red de Protección Social
de Nicaragua: Un análisis social de la ‘Red de
Protección Social’ (RPS) en Nicaragua.” Inter-
national Food Policy Research Institute, Wash-
ington, DC.
Admassie, A., D. Abebaw, and A. Woldemi-
chael. 2009. “Impact Evaluation of the Ethio-
pian Health Services Extension Programme.”
Journal of Development Effectiveness 1 (4):
430–49.
GLOBAL MONITORING REPORT 2011
Afridi, F. 2007. “Child Welfare Programs and
Child Nutrition: Evidence from a Mandated
School Meal Program in India.” Journal of
Development Economics 92 (2): 152–65.
Ahmed, A., M. Adato, A. Kudat, D. Gilligan, and
R. Colasan. 2006. “Interim Impact Evaluation
of the Conditional Cash Transfer Program in
Turkey. Final Report.” International Food Pol-
icy Research Institute, Washington, DC.
Alderman, H., ed. 2011. No Small Matter: The
Impact of Poverty, Shocks, and Human Capi-
tal Investments in Early Childhood Develop-
ment. Washington, DC: World Bank.
Andrabi, T., J. Das, and A. Khwaja. 2009. “Report
Cards: The Impact of Providing School and
Child Test Scores on Educational Markets.”
Unpublished manuscript, World Bank, Wash-
ington, DC.
Angrist, J. D., and J. Pischke. 2010. “The Cred-
ibility Revolution in Empirical Economics:
How Better Research Design Is Taking the
Con Out of Econometrics” Journal of Eco-
nomic Perspectives 24 (2): 3–30.
Ashraf, N., J. Berry, and J. M. Shapiro. 2007.
“Can Higher Prices Stimulate Product Use?
Evidence from a Field Experiment in Zambia.”
Working Paper 13247, National Bureau of
Economic Research, Cambridge, MA.
Ashworth, A., R. Shrimpton, and K. Jamil. 2008.
“Growth Monitoring and Promotion: Review
of Evidence of Impact.” Maternal and Child
Nutrition 4 (Suppl 1): 86–117.
Attanasio, O., E. Battistin, E. Fitzsimmons, A.
Mesnard, and M. Vera-Hernández. 2005.
“How Effective Are Conditional Cash Trans-
fers? Evidence from Colombia.” Briefi ng Note
54, Institute for Fiscal Studies, London.
Baird, S., E. Chirwa, C. McIntosh, and B. Özler.
2010. “The Short-Term Impacts of a School-
ing Conditional Cash Transfer Program on the
Sexual Behavior of Young Women.” Health
Economics 19: 55–68.
Baird, S., C. McIntosh, and B. Özler. 2011. “Cash
or Condition? Evidence from a Cash Transfer
Experiment.” Policy Research Working Paper
5259, World Bank, Washington, DC.
Baldacci, E., M. Guin-Siu, and L. de Mello. 2002.
“More on the Effectiveness of Public Spending
on Health Care and Education: A Covariance
Structure Model.” Working Paper WP/02/90,
International Monetary Fund, Washington
DC.
Banerjee, A. V., R. Banerji, E. Duflo, R. Glenner-
ster, and S. Khemani. 2010. “Pitfalls of
GLOBAL MONITORING REPORT 2011
Participatory Programs: Evidence from a Ran-
domized Evaluation in Education in India.”
American Economic Journal: Economic Pol-
icy 2 (1): 1–30.
Banerjee, A., E. Duflo, S. Cole, and L. Linden.
2007. “Remedying Education: Evidence from
Two Randomized Experiments in India.”
Quarterly Journal of Economics 122 (3):
1235–64.
Banerjee, A., E. Duflo, R. Glennerster, and D.
Kothari. 2010. “Improving Immunisation Cov-
erage in Rural India: Clustered Randomised
Controlled Evaluation of Immunisation Cam-
paigns With and Without Incentives.” British
Medical Journal 340 (1): c2220.
Banerjee, A., S. Jacob, and M. Kremer, with J.
Lanjouw, and P. Lanjouw. 2005. “Promot-
ing School Participation in Rural Rajasthan:
Results from Some Prospective Trials.” Unpub-
lished manuscript, Massachusetts Institute of
Technology, Cambridge, MA.
Barber, S. L., and P. J. Gertler. 2010. “Empower-
ing Women: How Mexico’s Conditional Cash
Transfer Program Raised Prenatal Care Qual-
ity and Birth Weight.” Journal of Development
Effectiveness 2 (1): 51–73.
Barham, T., and J. Maluccio. 2008. “The Effect
of Conditional Cash Transfers on Vaccination
Coverage in Nicaragua.” Health and Society
Working Paper HS2008-01, Institute of Behav-
ioral Science, University of Colorado, Boulder,
CO.
Barrera-Osorio, F., M. Bertrand, L. L. Linden,
and F. Perez-Calle. 2008. “Conditional Cash
Transfers in Education: Design Features, Peer
and Sibling Effects Evidence from a Ran-
domized Experiment in Colombia.” Policy
Research Working Paper 4580, World Bank,
Washington, DC.
Barrera-Osorio, F., and L. L Linden. 2009. “The
Use and Misuse of Computers in Education:
Evidence from a Randomized Experiment in
Colombia.” Policy Research Working Paper
4836, World Bank, Washington, DC.
Barrera-Osorio, F., L. L Linden, and, M. Urquiola.
2007. “The Effects of User Fee Reductions
on Enrollment: Evidence from a Quasi-
Experiment.” Working Paper, Columbia Uni-
versity, New York.
Basinga P., P. J. Gertler, A. Binagwaho, A. Soucat,
J. Sturdy, and C. Vermeersch. 2010. “Paying
Primary Health Care Centers for Performance
in Rwanda.” Policy Research Working Paper
5190, World Bank, Washington, DC.
LINKING SPENDING AND OUTCOMES 95
Behrman, J., and J. Hoddinott. 2001. “An Evalu-
ation of the Impact of Progresa on Pre-school
child Height.” Discussion Paper 104, Interna-
tional Food Policy Research Institute, Wash-
ington, DC.
Bertrand, J. T., K. O’Reilly, J. Denison, R.
Anhang, and M. Sweat. 2006. “Systematic
Review of the Effectiveness of Mass Communi-
cation Programs to Change HIV/AIDS-related
Behaviors in Developing Countries.” Health
Education Research 21 (4): 567–97.
Bhutta, Z., T. Ahmed, R. Black, S. Cousens, K.
Dewey, E. Giugliani, B. Haider, B. Kirkwood,
S. Morris, H. P. S. Sachdev, and M. Shekar.
2008. “What Works? Interventions for Mater-
nal and Child Undernutrition and Survival.”
Lancet 371: 417–40.
Bidani, B., and M. Ravallion. 1997. “Decomposing
Social Indicators Using Distributional Data.”
Journal of Econometrics 77 (1): 125–39.
Björkman, M. 2006. “Does Money Matter for
Student Performance? Evidence from a Grant
Program in Uganda.” Working Paper 326,
Institute for International Economic Studies,
Stockholm University, Sweden.
Björkman, M., and J. Svensson. 2009. “Power
to the People: Evidence from a Randomized
Experiment of a Community-based Monitor-
ing Project in Uganda.” Quarterly Journal of
Economics 124: 734–69.
Bobonis, G., and F. Finan. 2009. “Neighborhood
Peer Effects in Secondary School Enrollment
Decisions.” Review of Economics and Statis-
tics 91 (4): 695–716.
Borkum, E. 2009. “Can Eliminating School Fees
in Poor Districts Boost Enrollment? Evidence
from South Africa.” Discussion Paper 0910-
06, Columbia University, New York.
Bruns, B., D. Filmer, and H. A. Patrinos. 2011.
Making Schools Work: New Evidence on
Accountability Reforms. Washington, DC:
World Bank.
Burnside, C., and D. Dollar. 1998. “Aid, the
Incentive Regime, and Poverty Reduction.”
Policy Research Working Paper 1937, World
Bank, Washington, DC.
Caldés, N., D. Coady, and J. Maluccio. 2006.
“The Cost of Poverty Alleviation Transfer Pro-
grams: A Comparative Analysis of Three Pro-
grams in Latin America.” World Development
34 (5): 818–37.
Cardoso, E., and A. Souza. 2004. “The Impact
of Cash Transfers on Child Labor and School
Attendance in Brazil.” Working Paper 04-W07,
96 LINKING SPENDING AND OUTCOMES
Department of Economics, Vanderbilt Univer-
sity, Nashville, TN.
Case, A., V. Hosegood, and F. Lund. 2005. “The
Reach and Impact of Child Support Grants:
Evidence from KwaZulu-Natal.” Development
Southern Africa 22: 467–82
Castro-Leal, F., J. Dayton, L. Demery, and K.
Mehra. 1999. “Public Social Spending in
Africa: Do the Poor Benefit?” World Bank
Research Observer 14 (1): 49–72.
Chaudhury, N., J. Hammer, M. Kremer, K.
Muralidharan, and F. H. Rogers. 2006. “Miss-
ing in Action: Teacher and Health Worker
Absence in Developing Countries.” Journal of
Economic Perspectives 20 (1): 91–116.
Chaudhury, N., and D. Parajuli. 2010. “Giving
It Back: Evaluating the Impact of Devolution
of School Management to Communities in
Nepal.” Unpublished manuscript, World Bank,
Washington, DC.
Clarke, S. E., M. C. H. Jukes, K. Njagi, L. Kha-
sakhala, B. Cundill, J. Otido, C. Crudder,
B. Estambale, and S. Brooker. 2008. “Effect
of Intermittent Preventive Treatment on
Health and Education in Schoolchildren: A
Cluster-Randomised, Double-Blind, Placebo-
Controlled Trial.” Lancet 372: 127–38.
Cohen, J., and P. Dupas. 2010. “Free Distribution
or Cost-Sharing? Evidence from a Randomized
Malaria Prevention Experiment.” Quarterly
Journal of Economics 125 (1): 1–45.
Cohen, J., P. Dupas, and S. Schaner. 2010. “Prices,
Diagnostic Tests and the Demand for Malaria
Treatment: Evidence from a Randomized
Trial.” Working Paper, Harvard University,
Cambridge, MA.
Cunha, F., and J. Heckman. 2010. “Investing in
Our Young People.” Working Paper 16201,
National Bureau of Economic Research, Cam-
bridge, MA.
Das, J., and J. Hammer. 2005. “Money for Noth-
ing: The Dire Straits of Medical Practice in
Delhi, India.” Policy Research Paper 3669,
World Bank, Washington, DC.
Davis, K. C., M. C. Farrelly, P. Messeri, and J.
Duke. 2009. “The Impact of National Smok-
ing Prevention Campaigns on Tobacco-Related
Beliefs, Intentions to Smoke and Smoking Ini-
tiation: Results from a Longitudinal Survey
of Youth in the United States.” International
Journal of Environmental Research and Pub-
lic Health 6 (2): 722–40.
Deaton, A. 2009. “Instruments of Development:
Randomization in the Tropics, and the Search
GLOBAL MONITORING REPORT 2011
for the Elusive Keys to Economic Develop-
ment.” Working Paper 14690, National Bureau
of Economic Research, Cambridge, MA.
de Brauw, A., and J. Hoddinott. 2008. “Must
Conditional Cash Transfer Programs Be Con-
ditioned to Be Effective? The Impact of Con-
ditioning Transfers on School Enrollment in
Mexico.” Discussion Paper 757, International
Food Policy Research Institute, Washington,
DC.
de Janvry, A., F. Finan, and E. Sadoulet. 2006.
“Can Conditional Cash Transfer Programs
Serve as Safety Nets in Keeping Children in
School and from Working When Exposed to
Shocks?” Journal of Development Economics
79: 349–73.
de Walque, D., H. Kazianga, and M. Over. 2010.
“Antiretroviral Therapy Awareness and Risky
Sexual Behaviors: Evidence from Mozam-
bique.” Policy Research Working Paper 5486,
World Bank, Washington, DC.
Downs, J. S., G. Loewenstein, and J. Wisdom.
2009. “Strategies for Promoting Healthier
Food Choices.” American Economic Review
99 (2): 159–64.
Duflo, E. 2003. “Grandmothers and Grand-
daughters: Old-Age Pension and Intrahouse-
hold Allocation in South Africa.” World Bank
Economic Review 17: 1–25.
Duflo, E., P. Dupas, and M. Kremer. 2007. “Peer
Effects, Pupil-teacher Ratios, and Teacher
Incentives.” Unpublished manuscript, Harvard
University, Cambridge, MA.
Duflo, E., P. Dupas, M. Kremer, and S. Sinei.
2006. “Education and HIV/AIDS Prevention:
Evidence from a Randomized Evaluation in
Western Kenya.” Policy Research Working
Paper 4024, World Bank, Washington, DC.
Duflo, E., R. Hanna, and S. Ryan. 2010. “Incen-
tives Work: Getting Teachers to Come to
School.” Unpublished manuscript, University
of Chicago, Chicago, IL.
Dupas, P. 2006. “Relative Risks and the Market
for Sex: Teenagers, Sugar Daddies, and HIV in
Kenya.” Unpublished manuscript, Dartmouth
College, Hanover, NH.
——— . 2009. “Do Teenagers Respond to HIV
Risk Information? Evidence from a Field
Experiment in Kenya.” Working Paper 14707,
National Bureau of Economic Research, Cam-
bridge, MA.
Edmonds, E. V. 2006. “Child Labor and School-
ing Responses to Anticipated Income Shock in
GLOBAL MONITORING REPORT 2011
South Africa.” Journal of Development Eco-
nomics 81: 386–414.
Edmonds, E. V., and N. Schady. 2009. “Pov-
erty Alleviation and Child Labor.” Working
Paper 15345, National Bureau of Economic
Research, Cambridge, MA.
Eichler, R., P. Auxila, A. Uder, and B. Desman-
gles. 2007. “Performance-Based Incentives for
Health: Six Years of Results from Supply-Side
Programs in Haiti.” Working Paper 121, Cen-
ter for Global Development, Washington, DC.
Eldridge, C., and N. Palmer. 2009. “Performance-
Based Payment: Some Reflections on the Dis-
course, Evidence and Unanswered Questions.”
Health Policy and Planning 24 (3): 160–66.
Ferraz, C., and B. Bruns. Forthcoming. “Incen-
tives to Teach: The Effects of Performance Pay
in Brazilian Schools.” World Bank, Washing-
ton, DC.
Filmer, D. 2003. “The Incidence of Public Expen-
diture on Health and Education.” Background
Note for World Development Report 2004,
World Bank, Washington, DC.
Filmer, D., J. Hammer, and L. Pritchett. 1998.
“Health Policy in Poor Countries: Weak Links
in the Chain?” Policy Research Working Paper
1874, World Bank, Washington, DC.
Filmer, D., and N. Schady. 2008. “Getting Girls
into School: Evidence from a Scholarship Pro-
gram in Cambodia.” Economic Development
and Cultural Change 56: 581–617.
———. 2009. “Are There Diminishing Returns to
Transfer Size in Conditional Cash Transfers?”
Policy Research Working Paper 4999, World
Bank, Washington, DC.
——— . 2010. “Does More Cash in Conditional
Cash Transfer Programs Always Lead to
Larger Impacts on School Attendance?” Jour-
nal of Development Economics.
Fiszbein, A., and N. Schady. 2009. Conditional
Cash Transfers: Reducing Present and Future
Poverty. Washington DC: World Bank.
Fujiwara, T. 2010. “Voting Technology, Political
Responsiveness, and Infant Health: Evidence
from Brazil.” Department of Economics, Uni-
versity of British Columbia, Vancouver. http://
grad.econ.ubc.ca/fujiwara/jmp.pdf.
Gaarder, M., A. Glassman, and J. Todd. 2010.
“Conditional Cash Transfers and Health:
Unpacking the Causal Chain.” Journal of
Development Effectiveness 2 (1): 6–50.
Galasso, E., and N. Umapathi. 2007. “Improving
Nutritional Status through Behavioral Change:
Lessons from Madagascar.” Policy Research
LINKING SPENDING AND OUTCOMES 97
Working Paper 4424, World Bank, Washing-
ton, DC.
Garner, P., R. Panpanich, S. Logan, and D. Davis.
2000. “Is Routine Growth Monitoring Effec-
tive? A Systematic Review of Trials.” Archives
of Diseases in Childhood 82: 197–201.
Gertler, P. J. 2004. “Do Conditional Cash Trans-
fers Improve Child Health? Evidence from
Progresa’s Control Randomized Experiment.”
American Economic Review 94 (2): 336–41.
Gertler, P. J., and S. Boyce. 2001. “An Experiment
in Incentive-Based Welfare: The Impact of Pro-
gresa on Health in Mexico.” Royal Economic
Society Annual Conference 2003, No. 85.
Gertler, P. J., S. Martinez, P. Premand, L. B. Raw-
lings, and C. M. J. Vermeersch. 2010. Impact
Evaluation in Practice. Washington, DC:
World Bank.
Gertler, P. J., H. A. Patrinos, and M. Rubio-
Codina. 2006. “Empowering Parents to
Improve Education: Evidence from Rural Mex-
ico.” Policy Research Working Paper 3935,
World Bank, Washington, DC.
Glewwe, P., N. Ilas, and M. Kremer. 2003.
“Teacher Incentives.” Working Paper 9671,
National Bureau of Economic Research, Cam-
bridge, MA.
Glewwe, P., M. Kremer, and S. Moulin. 2007.
“Many Children Left Behind? Textbooks and
Test Scores in Kenya.” Working Paper 13300,
National Bureau of Economic Research, Cam-
bridge, MA.
Glewwe, P., M. Kremer, S. Moulin, and E. Zitze-
witz. 2004. “Retrospective vs. Prospective
Analyses of School Inputs: The Case of Flip
Charts in Kenya.” Journal of Development
Economics, 74: 251–68.
Go, D. 2010. “Global Monitoring Report 2011
Approach Paper.” Unpublished manuscript,
World Bank, Washington, DC.
Gong, R. 2010. “HIV Testing and Risky Sexual
Behavior.” Job Market Paper, PhD Candidate,
University of California-Berkeley, Berkeley,
CA.
Goyal, S., and P. Pandey. 2009. “How Do Gov-
ernment and Private Schools Differ? Findings
from Two Large Indian States.” South Asia
Human Development Sector Report No. 30,
World Bank, Washington, DC.
Grantham-McGregor, S., Y. B. Cheung, S. Cueto,
P. Glewwe, L. Richer, B. Trupp, and the Inter-
national Child Development Steering Group.
2007. “Developmental Potential in the First 5
98 LINKING SPENDING AND OUTCOMES
Years for Children in Developing Countries.”
Lancet 369: 60–70.
Gupta, S., M. Verhoeven, and E. Tiongson. 2003.
“Public Spending on Health Care and the
Poor.” Health Economics 12: 685–96.
Hanushek, E. A. 2008. “Incentives for Efficiency
and Equity in the School System.” Perspektiven
der Wirtschaftspolitik 9 (Special Issue): 5–27.
Hanushek, E. A., V. Lavy, and K. Hitomi. 2008.
“Do Students Care about School Quality?
Determinants of Dropout Behavior in Devel-
oping Countries.” Journal of Human Capital
1 (2): 69–105.
Hanushek, E. A., and L. Woessmann. 2008. “The
Role of Cognitive Skills in Economic Develop-
ment.” Journal of Economic Literature 46 (3):
607–68.
He, F., L. Linden, and M. MacLeod. 2007.
“Teaching What Teachers Don’t Know: An
Assessment of the Pratham English Language
Program.” Unpublished manuscript, Columbia
University, New York.
Hoddinott, J. 2008. “Nutrition and Conditional
Cash Transfer (CCT) Programs.” Unpub-
lished manuscript, International Food Policy
Research Institute, Washington, DC.
IHME (Institute for Health Metrics and Evalua-
tion). 2010. “Financing Global Health 2009:
Tracking Development Assistance for Health.”
University of Washington, Seattle, WA.
Jacoby, E., S. Cueto, and E. Pollitt. 1996. “Ben-
efits of a School Breakfast Program among
Andean Children in Huaraz, Peru.” Food and
Nutrition Bulletin 17 (1): 54–64.
Jalan, J., and E. Somanathan. 2008. “The Impor-
tance of Being Informed: Experimental Evi-
dence on Demand for Environmental Qual-
ity.” Journal of Development Economics 87
(1) 14–28.
Jamison, D., B. Searle, K. Galda, and S.
Heyneman. 1981. “Improving Elementary
Mathematics Education in Nicaragua: An
Experimental Study of the Impact of Text-
books and Radio on Achievement.” Journal of
Educational Psychology 73 (4): 556–67.
Jensen, R. 2010. “The (Perceived) Returns to Edu-
cation and Demand for Schooling.” Quarterly
Journal of Economics 125 (2): 515–48.
Kazianga, H., D. de Walque, and H. Alderman.
2009. “Educational and Health Impacts of
Two School Feeding Schemes: Evidence from
a Randomized Trial in Rural Burkina Faso.”
Policy Research Working Paper 4976, World
Bank, Washington, DC.
GLOBAL MONITORING REPORT 2011
Khemani, S. 2010. “Political Economy of Infra-
structure Spending in India.” Policy Research
Working Paper 5423, World Bank, Washing-
ton, DC.
Kremer, M. E., and D. Chen. 2001. “Interim
Report on a Teacher Incentive Program in
Kenya.” Unpublished manuscript, Harvard
University, Cambridge, MA.
Kremer, M., and A. Holla. 2008. “Pricing and
Access: Lessons from Randomized Evaluations
in Education and Health.” Unpublished manu-
script, Harvard University, Cambridge, MA.
———. 2009. “Improving Education in the Devel-
oping World: What Have We Learned from
Randomized Evaluations?” Annual Review of
Economics 1: 513–45.
Kremer, M., and E. Miguel. 2007. “The Illusion
of Sustainability.” Quarterly Journal of Eco-
nomics 112 (3): 1007–65.
Kremer, M., E. Miguel, and R. Thornton. 2009.
“Incentives to Learn.” Review of Economics
and Statistics 91 (3): 437–56.
Kremer, M., S. Moulin, and R. Namunyu. 2003.
“Decentralization: A Cautionary Tale.”
Unpublished manuscript, Harvard University,
Cambridge, MA.
Kremer, M., and A. P. Zwane. 2007. “What
Works in Fighting Diarrheal Diseases in Devel-
oping Countries? A Critical Review.” World
Bank Research Observer 22:1–24.
Lalive, R., and A. Cattaneo. 2006. “Social Inter-
actions and Schooling Decisions.” Discussion
Paper 2250, Institute for the Study of Labor
(IZA), Bonn, Germany.
Legovini, A. 2010. “Development Impact Evalu-
ation Initiative: A World Bank–Wide Strategic
Approach to Enhancing Development Effec-
tiveness” Unpublished manuscript, World
Bank, Washington, DC.
Leroy, J. L., R. Marie, and E. Verhofstadt. 2009.
“The Impact of Conditional Cash Transfer
Programmes on Child Nutrition: A Review of
Evidence Using a Programme Theory Frame-
work.” Journal of Development Effectiveness
1: (2) 103–29.
Levy, D., and J. Ohls. 2007. “Evaluation of Ja-
maica’s PATH Program: Final Report.” Math-
ematica Policy Research, Washington, DC.
Lim, S., L. Dandona, J. Hoisington, S. James, M.
Hogan, and E. Gakidou. 2010. “India’s Janani
Suraksha Yojana, a Conditional Cash Trans-
fer Programme to Increase Births in Health
Facilities: An Impact Evaluation.” Lancet 375:
2009–23.
GLOBAL MONITORING REPORT 2011
Macours, K., N. Schady, and R. Vakis. 2008.
“Cash Transfers, Behavioral Changes, and the
Cognitive Development of Young Children:
Evidence from a Randomized Experiment.”
Policy Research Working Paper 4759, World
Bank, Washington, DC.
Madajewicz, M., A. Pfaff, A. van Geen, J. Gra-
ziano, I. Hussein, H. Monotaj, R. Sylvi, and H.
Ahsan. 2007. “Can Information Alone Change
Behavior? Response to Arsenic Contamination
of Groundwater in Bangladesh.” Journal of
Development Economics 84 (2) 731–54.
Mahal A., J. Sing, F. Afridi, V. Lamba, A. Gumber,
and V. Selvaraju. 2000. “Who Benefits from
Public Health Spending in India?” National
Council for Applied Economic Research, New
Delhi.
Maluccio, J., and R. Flores. 2005. “Impact Evalu-
ation of a Conditional Cash Transfer Program:
The Nicaraguan Red de Protección Social.”
Research Report 141, International Food Pol-
icy Research Institute, Washington, DC.
Mavedzenge, S., A. Doyle, and D. Ross. 2010.
“HIV Prevention in Young People in Sub-
Saharan Africa: A Systematic Review.” Infec-
tious Disease Epidemiology Unit, London
School of Hygiene and Tropical Medicine,
London.
McCoy, S., R. Kangwende, and N. Padian. 2009.
“Behavior Change Interventions to Prevent
HIV among Women Living in Low and Mid-
dle Income Countries.” Synthetic Review 008,
International Initiative for Impact Evaluation,
New Delhi, India.
Medley, A., C. Kennedy, K. O’Reilly, and M.
Sweat. 2009. “Effectiveness of Peer Education
Interventions for HIV Prevention in Develop-
ing Countries: A Systematic Review and Meta-
Analysis.” AIDS Education and Prevention 21
(3): 181–206.
Meessen, B., J. P. Kashala, and L. Musango. 2007.
“Output-Based Payment to Boost Staff Produc-
tivity in Public Health Centres: Contracting in
Kabutare District, Rwanda.” Bulletin of the
World Health Organization 85 (2): 108–15.
Meessen, B., L. Musango, J. P. Kashala, and J.
Lemlin. 2006. “Reviewing Institutions of
Rural Health Centres: The Performance Initia-
tive in Butare, Rwanda.” Tropical Medicine &
International Health 11 (8): 1303–17.
Meng, X., and J. Ryan. 2010. “Does a Food for
Education Program Affect School Outcomes?”
The Bangladesh Case. Journal of Population
Economics 23 (2): 415–47.
LINKING SPENDING AND OUTCOMES 99
Mesnard, A. 2005. “Evaluation of the Familias
en Acción Program in Colombia: Do Condi-
tional Subsidies Improve Education, Health
and Nutritional Outcomes?” Institute for Fis-
cal Studies, London.
Miguel, E., and M. Kremer. 2004. “Worms: Iden-
tifying Impacts on Education and Health in the
Presence of Treatment Externalities.” Econo-
metrica 72 (1): 159–217.
Mizala, A., P. Romaguera, and M. Urquiola.
2007. “Socioeconomic Status or Noise? Trade-
offs in the Generation of School Quality Infor-
mation.” Journal of Development Economics
84: 61–75.
Morris, S., P. Olinto, R. Flores, E.A.F. Nilson,
and A. C. Figueiró. 2004. “Conditional Cash
Transfers Are Associated with a Small Reduc-
tion in the Weight Gain of Preschool Children
in Northeast Brazil.” Journal of Nutrition 134:
2336–41.
Muralidharan, K., and V. Sundararaman. 2009.
“Teacher Performance Pay: Experimental
Evidence from India.” Working Paper 15323,
National Bureau of Economic Research, Cam-
bridge, MA.
Newman, J. L., M. Pradhan, L. B. Rawlings, G.
Ridder, R. Coa, and J. L. Evia. 2002. “An
Impact Evaluation of Education, Health, and
Water Supply Investments by the Bolivian
Social Investment Fund.” World Bank Eco-
nomic Review 16 (2): 241–74.
Nguyen, T. 2008. “Information, Role Models and
Perceived Returns to Education: Experimental
Evidence from Madagascar.” Working Paper,
Massachusetts Institute of Technology, Cam-
bridge, MA.
O’Donnell, O., E. van Doorslaer, R. Rannan-
Eliya, A. Somanathan, S. Adhikari, D. Harbi-
anto, C. Garg, P. Hanvoravongchai, M. Huq,
A. Karan, G. Leung, C. W. Ng, B. R. Pande,
K. Tin, K. Tisayaticom, L. Trisnantoro, Y.
Zhang, and Y. Zhao. 2007. “The Incidence of
Public Spending on Healthcare: Comparative
Evidence from Asia.” World Bank Economic
Review 21 (1): 93–123.
OECD-DAC (Organisation for Economic Co-
operation and Development-Development
Assistance Committee). 2009. International
Development Statistics: Online Databases on
Aid and Other Resource Flows. Paris, France.
http://www.oecd.org/dac/stats/idsonline.
Paxson, C., and N. Schady. 2007. “Cognitive Devel-
opment among Young Children in Ecuador:
100 LINKING SPENDING AND OUTCOMES
The Roles of Wealth, Health, and Parenting.”
Journal of Human Resources 42 (1): 49–84.
——— . 2008. “Does Money Matter? The Effects
of Cash Transfers on Child Health and Devel-
opment in Rural Ecuador.” Unpublished man-
uscript, World Bank, Washington, DC.
Piper, B., and M. Korda. 2010. “EGRA Plus: Libe-
ria. Program Evaluation Report. Draft.” RTI
International, Research Triangle Park, NC.
Pop-Eleches C., H. Thirumurthy, J. P. Habya-
rimana, J. G. Zivin, M. P. Goldstein, D. de
Walque, L. Mackeen, J. Haberer, S. Kimaiyo,
J. Sidle, D. Ngare, and D. R. Bangsberg. 2011.
“Mobile Phone Technologies Improve Adher-
ence to Antiretroviral Treatment in a Resource-
Limited Setting: A Randomized Controlled
Trial of Text Message Reminders.” AIDS 25
(6): 825–34.
Powell, C. A., S. P. Walker, S. M. Chang, and S.
M. Grantham-McGregor. 1998. “Nutrition
and Education: A Randomized Trial of the
Effects of Breakfast in Rural Primary School
Children.” American Journal of Clinical
Nutrition 68: 873–79.
Pratham Organization. 2005. “Annual Status of
Education Report.” Pratham Resource Center,
Mumbai, India.
Ravallion, M. 2009. “Evaluation in the Prac-
tice of Development.” World Bank Research
Observer 24 (1): 29–53.
Regalía, F., and L. Castro. 2009. “Nicaragua:
Combining Demand- and Supply-Side Incen-
tives.” In Performance Incentives for Global
Health—Potential and Pitfalls, ed. R. Eichler,
R. Levine, and the Performance-Based Incen-
tives Working Group, 215–35. Washington,
DC: Center for Global Development.
Reinikka, R., and J. Svensson. 2005. “Fighting
Corruption to Improve Schooling: Evidence
from a Newspaper Campaign in Uganda.”
Journal of the European Economic Associa-
tion 3 (2-3): 259–67.
——— . 2006. “The Power of Information: Evi-
dence from a Newspaper Campaign to Reduce
Capture of Public Funds.” World Bank, Wash-
ington, DC; Institute for International Eco-
nomic Studies, Stockholm University, Sweden.
———. 2010. “Working for God? Evidence from a
Change in Financing of Nonprofit Health Care
Providers in Uganda.” Journal of the European
Economic Association 8 (6): 1159–78.
Rivera, J. A., D. Sotres-Álvarez, J.-P. Habicht, T.
Shamah, and S. Villalpando. 2004. “Impact of
the Mexican Program for Education, Health,
GLOBAL MONITORING REPORT 2011
and Nutrition (Progresa) on Rates of Growth
and Anemia in Infants and Young Children: A
Randomized Effectiveness Study.” JAMA 291
(21): 2563–70.
Roberfroid, D., P. Kolsteren, T. Hoerée, and B.
Maire. 2005. “Do Growth Monitoring and
Promotion Programs Answer the Performance
Criteria of a Screening Program? A Criti-
cal Analysis Based on a Systematic Review.”
Tropical Medicine & International Health 10:
1121–33.
Rodrik, D. 2008. “The New Development Eco-
nomics: We Shall Experiment, But How Shall
We Learn?” Unpublished manuscript, John F.
Kennedy School of Government, Harvard Uni-
versity, Cambridge, MA.
Sahn, D., and S. Younger. 2000. “Expenditure
Incidence in Africa: Microeconomic Evidence.”
Fiscal Studies 21 (3): 321–48.
Schady, N., and M. C. Araujo. 2008. “Cash
Transfers, Conditions, and School Enrollment
in Ecuador.” Economía 8 (2): 43–70.
Schady, N., and J. Rosero. 2008. “Are Cash
Transfers Made to Women Spent Like Other
Sources of Income?” Economics Letters 101
(3): 246–48.
Schultz, T. P. 2004. “School Subsidies for the
Poor: Evaluating the Mexican Progresa Pov-
erty Program.” Journal of Development Eco-
nomics 74 (1): 199–250.
Schwartz, J. B., and I. Bhushan. 2004. “Improv-
ing Equity in Immunization through a Public-
Private Partnership in Cambodia.” Bulletin of
the World Health Organization 82: 661–67.
Sims, C.A. 2010. “But Economics Is Not an
Experimental Science.” Journal of Economic
Perspectives 24 (2): 59–68.
Skoufi as, E., and J. Shapiro. 2006. “Evaluating
the Impact of Mexico’s Quality Schools Pro-
gram: The Pitfalls of Using Nonexperimental
Data.” Policy Research Working Paper 4036,
World Bank, Washington, DC.
Soares, F. V., R. Ribas, and G. I. Hirata. 2008.
“Achievements and Shortfalls of Conditional
Cash Transfers: Impact Evaluation of Para-
guay’s Tekopora Program.” International Pov-
erty Center, Brasilia, Brazil.
Soeters, R., C. Habineza, and P. B. Peerenboom.
2006. “Performance-Based Financing and
Changing the District Health System: Expe-
rience from Rwanda.” Bulletin of the World
Health Organization 84 (11): 884–89.
Stasavage, D. 2005. “Democracy and Education
Spending in Africa.” American Journal of
Political Science 49 (2): 343–58.
GLOBAL MONITORING REPORT 2011
Temperley, M., D. H. Mueller, J. Kiambo Njagi,
W. Akhwale, S. E. Clarke, M. C. H. Jukes,
B. B. A. Estambale, and S. Brooker. 2008.
“Costs and Cost-Effectiveness of Delivering
Intermittent Preventive Treatment through
Schools in Western Kenya.” Malaria Journal
7: 196–207.
Thornton, R. 2005. “The Demand for and Impact
of HIV Testing: Evidence from a Field Experi-
ment.” Unpublished manuscript, Harvard Uni-
versity, Cambridge, MA.
UNESCO (United Nations Educational, Sci-
entific, and Cultural Organization). 2010.
Education for All Global Monitoring Report
2010: Reaching the Marginalized. Oxford,
UK: Oxford University Press.
Van de Walle, D. 1995. “The Distribution of Sub-
sidies through Public Health Services in Indo-
nesia, 1978–87.” In Public Spending and the
Poor: Theory and Evidence, ed. D. Van de
Walle and K. Neads, 226–58. Washington,
DC: World Bank.
Vermeersch, C., and M. Kremer. 2004. “School
Meals, Educational Achievement, and School
Competition: Evidence from a Randomized
Evaluation.” Policy Research Working Paper
3523, World Bank, Washington, DC.
LINKING SPENDING AND OUTCOMES 101
Weinhard, L. S., M. P. Carey, B. T. Johnston, and
N. L. Bickham. 1999. “Effects of HIV Coun-
seling and Testing on Sexual Risk Behavior: A
Meta-Analytic Review of Published Research,
1985–1997.” American Journal of Public
Health 89 (9): 1152–63.
WHO (World Health Organization). 2008. WHO
Recommendations for Routine Immuniza-
tion. Geneva, Switzerland. http://www.who.
int/immunization/policy/WHO_EPI_Sum_
tables_Def_200713.pdf.
——— . 2010. World Health Report. Health Sys-
tems Financing: The Path to Universal Cover-
age. Geneva, Switzerland.
World Bank. 2003. World Development Report
2004: Making Services Work for Poor People.
Washington, DC.
World Bank/AERC (African Economic Research
Consortium). 2010. “Service Delivery Indica-
tors: Pilot in Education and Health in Africa.”
World Bank, Washington, DC.
Zivin J., H. Thirumurthy, and M. Goldstein.
2006. “AIDS Treatment and Intrahousehold
Resource Allocations: Children’s Nutrition and
Schooling in Kenya.” Working Paper 12689,
National Bureau of Economic Research, Cam-
bridge, MA.

Assisting Indigenous and
Socially Excluded Populations
A
s we approach 2015 and come closer
to meeting the Millennium Devel-
opment Goals (M DGs) targets,
the remaining challenges take on increased
urgency. One of these is reaching out to the
last and most difficult groups to reach—
vulnerable populations with tenuous connec-
tions to the modern state and its economy.
Indigenous groups tend to have deeper
poverty, less access to education, and worse
health outcomes than the general popula-
tion. In some rapidly growing economies,
particularly in Asia, indigenous groups have
enjoyed reductions in poverty at a pace com-
parable to general society. In other countries,
particularly in Latin America, slow growth
has slowed the pace of poverty reduction for
indigenous groups, and targeted programs
have made only a limited contribution. There
is an urgent need for research to improve the
availability and reliability of data on human
development among indigenous groups—and
to determine what kinds of programs have
improved their welfare and in what contexts.
This chapter documents the poverty, edu-
cation, and health of vulnerable and indige-
nous groups, highlighting their progress—and
the remaining gaps. It also reviews countries
that are off track in meeting the MDGs
mainly because they have large vulnerable
From helmet to turban, hats worn by women and children give distinctive touches to each group of Hmong.
4
populations and countries on track that have
off-track population groups. It also touches
on the impact of the modern world on small,
largely isolated groups, highlighting the need
for sensitivity in dealing with them.
Last in heading down the home
stretch
The last groups to be helped in countries are
invariably in areas difficult to reach, are usu-
ally vulnerable, and have a tenuous connec-
tion to the modern state and its economy.
Coming from minority ethnic groups and
indigenous populations (box 4.1), they tend
to speak a language different from the major-
ity.1 Whereas data coverage is a perennial
challenge, MDG indicators for ethnic minor-
ities and indigenous peoples are (with some
exceptions) worse than population averages.
Poverty is higher among indigenous
peoples than in the general population
As the global development community
looks for ways to meet the MDG of halv-
ing (from its 1990 level) the share of people
in poverty by 2015, it cannot ignore the
plight of the world’s indigenous peoples (box
4.1). They make up 4 percent of the global
103
104 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S
BOX 4.1 Who are indigenous peoples?
“Indigenous peoples” has no widely accepted defi-
nition. The World Bank’s position is that “because
of the varied and changing contexts in which indig-
enous peoples live and because there is no universally
accepted definition of indigenous peoples, World
Bank policy does not define the term. Indigenous
peoples may be referred to in different countries by
such terms as ‘indigenous ethnic minorities,’ ‘aborigi-
nals,’ ‘hill tribes,’ ‘minority nationalities,’ ‘scheduled
tribes,’ or ‘tribal groups’” (World Bank Operational
Directive 4.10).
The United Nations has not adopted a defi nition
but has developed a modern understanding of the
term based on a variety of characteristics: self-iden-
tification at the individual level and accepted by the
community as their member; historical continuity
with precolonial or presettler societies; a strong link
to territories and surrounding natural resources; a dis-
tinct social, economic, or political system; a distinct
language, culture, and belief system; individuals who
form nondominant groups within society; and those
who resolve to maintain and reproduce their ancestral
environments and systems as distinctive peoples and
communities.a
Moreover, evidence is growing that joining
together under a common identity as indigenous
peoples is fairly new and has accompanied a process
among some groups of “reclaiming” identity.
With few exceptions, MDG indicators for indig-
enous groups across Asia are worse than all-popu-
lation indicators. Under-five mortality rates for the
Nepalese Janajati are distributed around the national
level, but as a whole are below (that is, better than)
population—nearly 300 million—but they
account for about 10 percent of the world’s
poor; and nearly 80 percent of them are in
Asia.
Turning the situation around will require
widespread and sustainable economic growth
and poverty reduction, along with strategies
to address multiple sources of disadvantage
to reach those who need—and are willing to
accept—special assistance.
GLOBAL MONITORING REPORT 2011
the national level. In India, however, infant mortal-
ity among the scheduled tribes is uniformly higher
(worse) than the national average, and water depri-
vation rates both exceed and fall short of their
national levels. Among the Hill Tribes in Thailand;
the Kammu and Leu in the Lao People’s Demo-
cratic Republic; and the Hmong, Muong, and BaNa
in Vietnam, these rates are the worst in the region.
The lowest female literacy rates are found among the
Hmong in Lao PDR and Vietnam. And the existence
of vulnerable groups who fare much worse than the
general population is hardly unique to developing
countries. In Australia and New Zealand, all indi-
cators for Aborigines and Maori are worse than
national averages.
Data coverage is far more limited in Africa, mak-
ing overarching conclusions difficult. In many cases,
available data do not cover core groups widely con-
sidered to be indigenous because of their small size
(for example, the Ogiek in Kenya). The existing data
show that under-five mortality rates tend to be high-
est among West African groups (such as the Fulani
and Tuareg) and lowest among the Masai and Ethio-
pian groups. These last two groups also experience
the highest rates of water deprivation. Education
indicators are uniformly worse; even in countries
with higher literacy (such as Namibia), the male lit-
eracy rate for San males is less than half that of the
national sample; and for females, it is less than one
third.
Source: Hall and Patrinos 2011.
a. UN 1981.
One-third of indigenous people are poor.2
Among the majority of countries with disag-
gregated data, poverty rates exceed 50 percent
(table 4.1). Although the majority of indig-
enous people come from China and India,
the indigenous poor are slightly more evenly
distributed, largely owing to their strikingly
low poverty rate in China. In other countries,
indigenous peoples have disproportionately
high poverty rates.
GLOBAL MONITORING REPORT 2011
TABLE 4.1 Poverty rates, latest year available
Poverty head count (% poor)
Country/data year Indigenous
Democratic Republic
of Congo/2005 84.8
Mexico/2008 80.6
Ecuador/2006 78.0
Guatemala/2006 74.8
Gabon/2003 70.1
Bolivia/2006 69.3
Peru/2005 62.3
Vietnam/2006 52.3
Lao PDR 2002 50.6
Brazil/2002 48.0a
India/2004 43.8
Chile/2006 15.2
China/2002 5.4
Source: Hall and Patrinos 2011.
Note: Head count poverty rates are national.
a. Refers to whites and “black/brown” (African origin).
b. Refers to whites (Telles 2007). Head count poverty rates are
national.
A sizable poverty gap remains for indig-
enous people in global terms, ranging from
small in China to significant in Vietnam. 3
The gap has even been increasing over time.
Research from Latin American countries
with large indigenous populations—Bolivia,
Ecuador, Guatemala, and Peru—shows a
sticky persistence of (nonimproving) pov-
erty rates for indigenous peoples over time.
Progress used to be limited in Mexico as well,
but poverty rates there have been falling over
the last decade, especially between 2004 and
2008.4 This may be the first period in history
that the indigenous population in Mexico
has seen an improvement. More important,
analysis in Mexico shows that the difference
in poverty rates between indigenous and non-
indigenous peoples has been declining mostly
as a result of explained or observable factors:
education and access to services, the policy-
driven variables, are important.
Chile has also seen reductions in indige-
nous poverty in recent years. But other coun-
tries in Latin America have not been so suc-
cessful. Guatemala reduced poverty rapidly
until recently; but even when poverty declined
for the population as a whole, progress
among indigenous people was much slower.
A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S 105
Similar trends were seen in Bolivia, Ecuador,
and Peru. Indeed, for most countries in Latin
Nonindigenous America with a sizable indigenous popula-
tion, there is almost no progress in poverty
reduction for the indigenous population—
71.7
45.3 even in countries where the nonindigenous
46.6 population is making progress.
36.2 By contrast, poverty rates, even among
32.7 indigenous people, have declined sharply in
46.0
emerging Asia—notably, China, India, and
35.0
10.3 Vietnam (figure 4.1). China’s progress is
25.0 remarkable: in 1981, it had one of the world’s
23.0b highest proportions of people living in pov-
22.7 erty—84 percent. By 2005, that had fallen
9.1
to 16 percent. 5 Even better, China’s ethnic
3.5
minorities’ poverty rates declined faster than
did the nonminority rates.
India and Vietnam also showed significant
declines: although not as dramatic as China’s,
overall, the declines were much more robust
for India’s minorities, scheduled castes, and
tribes and for Vietnam’s ethnic minorities.
But despite the rapid decline in poverty among
indigenous people in Vietnam, their poverty
rates remain much higher than those for the
nonindigenous population; and the gap has
widened slightly since the early 1990s.
Vulnerable groups receive less
schooling and underperform in school
As with poverty, indigenous people are also
disadvantaged in education, as in access to
schooling (table 4.2). To varying degrees in
nearly all countries, educational progress has
lagged because of indigenous, low-income,
gender, or disability status. Leaving such
groups at the fringes of the education system
will eventually impede a country’s ability to
develop. Even in India, despite its success
in rapidly reducing poverty for the whole
population (including significantly for the
scheduled tribes, or Adivasi [literally “origi-
nal inhabitants”]), this minority population
accounts for a fourth of the poorest wealth
decile. Education indicators tell a similar
story, with improvements but large and per-
sistent differences. Scheduled tribe children
lag far behind when it comes to educational
attainment above the primary level.6
106 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S GLOBAL MONITORING REPORT 2011

FIGURE 4.1 Progress is mixed in reducing the poverty of indigenous groups

poverty rate over time

a. Mexico b. Guatemala
100 100

90 90

80 80
70
percent

percent
70
60
60
50
50
40
40 30
30 20
1992 1994 1996 1998 2000 2002 2004 2006 2008 1992 1994 1996 1998 2000 2002 2004 2006
indigenous nonindigenous indigenous nonindigenous

c. Ecuador d. Peru
95 75
70
85
65
75 60
55
percent

percent

65 50
45
55
40
45 35
30
35 25
1994 1996 1998 2000 2002 2004 2006 1994 1996 1998 2000 2002 2004 2005
indigenous nonindigenous indigenous nonindigenous

e. Chile f. Bolivia
25 80
75
20 70
percent

percent

65
15 60
55
10 50
45
5 40
1996 1998 2000 2002 2004 2006 1997 1999 2001 2003 2005 2007
indigenous nonindigenous indigenous nonindigenous
GLOBAL MONITORING REPORT 2011 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S 107

FIGURE 4.1 (continued)

g. India h. Vietnam
70 100
65 90
60 80
55 70
50 60
percent

percent
45 50
40 40
35 30
30 20
25 10
20 0
1992 1994 1996 1998 2000 2002 2004 1993 1995 1997 1999 2001 2003 2005 2006
scheduled caste others scheduled tribes ethnic minority ethnic majority

i. China
14

12

10
percent

0
1998 1999 2000 2001 2002
minority Han

Source: Hall and Patrinos 2011.

TABLE 4.2 Years of schooling, latest year teaching, vulnerable groups are likely to
available experience discrimination that manifests in
Country Indigenous Nonindigenous different ways (including self-perceptions
China/2002 8.2 8.9 and stigma).
Peru/2001 6.4 8.7 Stigma is sometimes internalized, as an
Mexico/2008 6.3 8.6 experimental investigation into the impact of
Bolivia/2002 5.9 9.6 caste on test scores in India demonstrated.7
Brazil/2002 4.6a 6.6b
Children ages 11 and 12 were chosen at ran-
Ecuador/2006 4.3 6.9
Guatemala/2006 2.5 5.7 dom from a low caste and three high castes
and were given a series of puzzles to solve.
Source: Hall and Patrinos 2011.
Note: See box 1.5 for more information about Brazil. When caste was not announced to the chil-
a. Refers to whites and “black/brown” (African origin). dren, it had no bearing on the initial score
b. Refers to whites (Telles 2007).
or on the improvement in score registered in
subsequent test rounds. But when caste was
Not only do vulnerable groups receive announced before the test, the scores for low-
less schooling; they also tend to achieve caste children fell dramatically, by 14–39
less. In addition to poor starting condi- percent (figure 4.2). These fi ndings confi rm
tions, insufficient inputs, and ineffective how much social identities are a product of
108 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N GLOBAL MONITORING REPORT 2011

FIGURE 4.2 Test results show how stigma can be fractionalization on the quality of institutions
internalized and economic growth. The data show just
how heterogeneous many developing coun-
4 tries are, but they do not show that a high
degree of heterogeneity produces negative
3 outcomes. Fractionalization has been shown
to slow the progress on many of the MDGs.9
test scores

2 Although fractionalization is not correlated

1
0
caste not announced
high caste
Source: Hoff and Pandey 2004.
history, culture, and personal experience,
creating pronounced educational disadvan-
tages through their effects on individual
expectations.
Global evidence also shows how identity
can limit development. A fractionalization
data set compiled by Alesina and colleagues
measures the degree of ethnic, linguistic,
and religious heterogeneity in various coun-
tries. 8 It can be used to test the effects of
FIGURE 4.3 Heterogeneity has a negative effect on test scores
60
55
50
test scores
with schooling progress, there is an indica-
tion of a negative effect of heterogeneity on
test scores (figure 4.3).
Both the global and Indian examples
caste announced underscore the need to be careful in develop-
low caste
ing appropriate learning materials and envi-
ronments for minorities. Although some of
the self-perceptions and stigma will take time
to address, these more immediate lessons for
promoting rights and accountabilities can be
used now.
Indigenous peoples live shorter lives
everywhere
The World Health Report 2010 states,
“income is not the only factor influencing
[health] service coverage. In many settings,
migrants, ethnic minorities and indigenous
people use [health] services less than other
population groups, even though their needs
may be greater.”10
Indigenous peoples therefore deserve spe-
cial attention. They live shorter lives and are
in worse health than their nonindigenous
compatriots almost everywhere. In seven
Latin American countries, the proportion of
indigenous women receiving antenatal care
or giving birth at health facilities was much
lower than for nonindigenous women.11 Such
inequality is one of the causes of the dispar-

45 ity in maternal health outcomes between

the two populations. African-American
40 women in the same countries also gave birth
at health facilities less frequently and had
35 poorer maternal health outcomes than other
women.
30 Such health inequalities are not unique to
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 low-income countries. Australia, Canada,
ethnolinguistic fractionalization index and New Zealand show variations in access
to health services between the two popu-
Source: World Bank staff calculations using data from Alesina et al. 2003 and Schlotter 2010. lations, frequently linked to distance and
GLOBAL MONITORING REPORT 2011 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N 109

MAP 4.1 Almost nine million children still die each year before they reach their fifth birthday
IBRD 38449
APRIL 2011
Child mortality

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Monaco Tajikistan
of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Ghana Nigeria Ethiopia Sri Micronesia
R.B. de Guyana Sierra Leone Côte Central Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
New
Dominican Puerto British Virgin
Poland Child mortality Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep.

Slovak Rep.
Mortality rate, under-five, per 1,000
U.S. Virgin Islands Antigua and Barbuda
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary
≥ 100
and Nevis
Dominica Slovenia Romania 50–99.9
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and 30–49.9
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino 15–29.9

Montenegro Kosovo
Grenada FYR ≤14.9
Italy Macedonia
Trinidad Vatican Albania
R.B. de Venezuela
and Tobago City Greece no data

MDG performance

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Monaco Tajikistan of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Pakistan Bhutan
Bahrain Nepal
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola Malawi
Zambia Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina MDG performance
New
Dominican Puerto British Virgin
Poland
MDG 4.A Reduce by two-thirds, Zealand
Germany

Republic Rico (US) Islands (UK)

between 1990 and 2015, the under-five
Ukraine

Anguilla (UK) Czech Rep.

U.S. Virgin Islands Antigua and Barbuda Slovak Rep. mortality rate
(US) Austria
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Hungary
and Nevis Slovenia on target
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia close to target
(Neth) Bosnia and
Bonaire St. Vincent and
St. Lucia San Herz. Serbia
Aruba far from target
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino This map was produced by the Map Design Unit of The World Bank.
Montenegro Kosovo
Grenada
Italy
FYR no data The boundaries, colors, denominations and any other information
shown on this map do not imply, on the part of The World Bank
Trinidad Macedonia
and Tobago Vatican Albania Group, any judgment on the legal status of any territory, or any
R.B. de Venezuela City Greece endorsement or acceptance of such boundaries.

Source: World Bank staff calculations based on data from the World Development Indicators database.
110 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S
FIGURE 4.4 Both poor and rich countries show
gaps in life expectancy
Australia
Nepal
Guatemala
New Zealand
Panama
Canada
Mexico
0 2 4 6 8 10 12 14 16 18 20
years
Source: UN 2009, p. 159.
Note: The figure shows the difference in years of life expectancy between
indigenous and nonindigenous groups in each country.
BOX 4.2 The Roma of Europe
The Roma, or “Gypsies,” are a Romani subgroup of
about 7 million to 9 million people living primarily
in Central and Eastern Europe. They are poorer than
the general population: in some countries, Roma pov-
erty rates are more than 10 times those of non-Roma.a
And they are more likely to fall into poverty and stay
poor. They also form a large proportion of youth and
the potential labor force in these countries. But their
low level of education means that European Union
economies are losing hundreds of millions of euros
annually in production and fiscal contributions.
Lower-bound annual estimates of productivity
losses for Bulgaria, the Czech Republic, Romania, and
Serbia total more than €2 billion, and there are similar
estimates of €860 million in fiscal losses.b Using other
Roma population estimates, the economic losses for
the four countries combined amount to €5.7 billion
annually, and the fiscal losses are €2 billion annually.c
The annual fiscal gains from bridging the employment
gap are much larger than the total cost of investing in
public education for all Roma children—by factors of
7.7 in Bulgaria, 7.4 in the Czech Republic, 3.3 in Ser-
bia, and 2.4 in Romania.
GLOBAL MONITORING REPORT 2011
transportation costs. Some rich countries also
show gaps in life expectancy (figure 4.4).
Further evidence of insufficient attention
to the needs of minority groups is seen in
Europe, where the largest and most disadvan-
taged group, Roma, lags far behind the conti-
nent’s majority population (box 4.2).
Gender is a key dimension
Gender is a key dimension in the social indi-
cators of indigenous or otherwise excluded
groups. Although both boys and girls in these
groups are significantly underrepresented in
school and lag on other important indicators,
girls are particularly disadvantaged. Disturb-
ingly, out-of-school girls from indigenous
populations make up a large portion of total
population of out-of-school girls in develop-
ing countries.12
European governments and others have made a
political commitment to improve Romani socioeco-
nomic status and social inclusion under the aegis of
the Decade of Roma Inclusion 2005–15. The initia-
tive brings together governments and intergovern-
mental and nongovernmental organizations as well as
Romani civil society to help ensure progress toward
improving the welfare of Roma and to review such
progress transparently and quantifiably. It commits
governments to focus on education, employment,
health, and housing while taking into account pov-
erty, discrimination, and gender bias.
The Open Society Foundation documents the prog-
ress that countries are making at the halfway point
for the 4.5 million Roma in participating countries.d
Unfortunately, a lack of data remains the biggest
obstacle in any assessment, as shown in the table on
the next page. But even these patchy data allow one to
see, for example, that the infant mortality rate among
Roma is two or three times as high as that among the
general population.
GLOBAL MONITORING REPORT 2011 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S 111

BOX 4.2 The Roma of Europe (continued)

Roma progress on selected indicators

Primary education Infant mortality rate
completion rate (per 1,000 live births)

Country Year Poverty (%)a General (%) Among Roma (%) General Among Roma

2005 Insufficient data 14.0 16.0 No data

Albania
Most recent 78 Insufficient data Insufficient data 13.0 No data
Insufficient
Bosnia and 2005 Insufficient data No data data No data
Herzegovina
Most recent 27 Insufficient data No data 13.0 No data
2005 Insufficient data 28.3 10.4 25.0
Bulgaria
Most recent 46 Insufficient data 31.6 8.6 25.0
2005 95.0 No data 5.7 25.1
Croatia
Most recent 10 101.0 No data 4.5 11.5
2005 102.0 No data 3.4 No data
Czech Republic
Most recent 45 93.2 No data 2.7 No data
2005 95.0 76.4 6.2 No data
Hungary
Most recent 9 96.7 No newer data 5.6 No data
2005 96.0 50.8 12.8 Insufficient data
Macedonia, FYR
Most recent 33 92.0 No data 10.8 Insufficient data
2005 91.1 9.2 9.5 No data
Montenegro
Most recent 27 No newer data 20.0 7.5 No data
2005 No data 31.8 15.0 Insufficient data
Romania
Most recent 66 No data 19.8 11.0 No data
2005 95.0 22.7 8.0 25.0
Serbia
Most recent 57 99.5 No data 6.7 No newer data
2005 94.0 No data 7.2 No data
Slovak Republic
Most recent n.a. No newer data No data 5.9 No data
Source: OSI 2010; poverty estimates from the World Bank.
Note: n.a. = not available.
a. Percent of Roma living in households below $4.30 per day (purchasing power parity), expenditure based.

What works for Roma inclusion Such interventions can be for supply (such as explicit
desegregation efforts, teacher training, and school
Increasing the number of high school graduates grants) and for demand (such as Roma mediators and
would give the current generation of young Roma a conditional cash transfer programs).
better chance in the labor market and would improve
school readiness to boost the chances of the next gen-
eration entering the classroom with the same skills
a. Ringold, Orenstein, and Wilkens 2005.
as non-Roma. International experience suggests that b. De Laat 2010; World Bank 2010.
investments in early childhood development and c. De Laat 2010; World Bank 2010.
improvements in school attendance and completion d. OSI 2010.
are the most promising interventions to break the e. See, for example, Heckman (2006); Kremer, Miguel, and
intergenerational transmission of social exclusion.e Thornton (2009); and Patrinos (2007).
112 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S
Sub-Saharan Africa has about 23 million
girls out of school, 75 percent from excluded
groups; South Asia has 23 million and 67
percent; the Middle East and North Africa
have almost 5 million and 90 percent; East-
ern Europe and Central Asia have 1.5 million
and 90 percent (including rural populations in
Turkey); and Latin America has 1.5 million—
almost all from excluded groups. In aggre-
gate, 71 percent of out-of-school girls in devel-
oping countries are from excluded groups.13
In India, tribal women fare the worst: even
among younger age cohorts (ages 15–21 in
2005), they attain an average of just four years
of education, three years less than nontribal
women.14 In Lao PDR, non-Lao-Tai women
receive significantly less education than non-
Lao-Tai men or Lao-Tai of both sexes. For
example, 34 percent of rural non-Lao-Tai
girls had never attended school in 2002–03,
compared with 6 percent of Lao-Tai girls.15
Indigenous groups and the
MDGS
Some countries that are off track to reach one
or more of the MDGs have large indigenous
BOX 4.3 Vulnerable groups deserve more attention in MDG country reports
A review of 50 MDG country reports found that eth-
nic or linguistic minorities are mentioned in only 19,
and the inequalities experienced by religious minori-
ties are mentioned in only 2. An additional 10 reports
mention only indigenous peoples, without identifying
any other minority groups.
The mentions of minorities vary widely, with some
reports providing a good range of information and
disaggregated data under several MDGs. In other
cases, minorities are mentioned only in the back-
ground section describing the national population
and without particular attention to their situation in
relation to the MDGs. Minorities are mentioned most
frequently in connection with Goal 2 on universal
primary education.
GLOBAL MONITORING REPORT 2011
populations, although their presence may not
be the only reason for this shortfall. Even
some on-track countries have these popula-
tions; thus, when data are disaggregated,
they are off track in the sense that although
the country may reach all (or most) of the
MDGs, but has significant segments of the
population that are off track (or seriously off
track). Indigenous people get little attention
in country reports designed to monitor prog-
ress in meeting the goals (box 4.3).
Off-track countries—minority groups
are lagging severely
Many of the off-track countries are in
Africa.16 And some of them are off track
because of the severe lack of progress of their
minority groups. Nigeria, for example, has
three major tribes—the Igbo, Hausa, and
Yoruba—more than 200 ethnic groups, and
more than 500 indigenous languages and
dialects. It would be important to use disag-
gregated data on these subgroups to investi-
gate the link between minority groups and
the failure to achieve the MDGs—not just for
Nigeria, but more generally.
Attention to indigenous peoples, in general, is
significantly higher than attention to nonindigenous
marginalized minorities. Although attention to gen-
der issues in many MDG country reports is positive,
there is very little consideration of discrimination
experienced by minority women or of targeted poli-
cies for them.
Minorities are virtually absent from the MDG
country reports from donor countries. None of those
reports considers minorities under any of the eight
goals, and only the reports for Nepal and Vietnam
give sufficient attention to indigenous peoples. Nor do
any reports indicate any consultation with indigenous
peoples or consistently provide disaggregated data for
them.
Sources: UN 2010a; Hartley 2008.
GLOBAL MONITORING REPORT 2011 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S 113

TABLE 4.3 Status of indigenous groups relative to the MDGs, selected African countries
Nutrition Net primary
Under-five mortality Water deprivation deprivation Literacy rate enrollment
(% of (% of (% of (% of Households in
Country/data year/group (per 1,000 live births) (% of households) (% of children) males) females) boys) girls) sample (n)
Cameroon/2004 148 29 13 80 65 81 78 10,462
Peulh 170 21 11 43 19 60 55 387
Pygmy 160 54 54 17 10 65 100 18
Fulfulde 192 26 18 27 13 57 49 1,632
Niger/2006 218 28 29 28 12 44 29 7,660
Peul 204 38 33 5 5 17 19 350
Tuareg 204 52 30 17 5 30 29 635
Mali/2006 215 6 16 37 17 46 39 12,998
Peulh 229 4 16 31 16 38 35 1,400
Tanachek 194 20 17 28 11 41 28 815
Guinea/2005 188 59 15 44 16 58 49 6,282
Peulh 171 61 12 40 14 56 45 2,228
Senegal/2005 135 11 5 54 35 58 58 7,407
Poular 137 13 8 44 29 56 56 1,990
Source: Computed from demographic and health surveys in MacDonald forthcoming.

Demographic and health surveys show
the frequent considerable disadvantage in
belonging to an indigenous group in some
low-income African countries (table 4.3). In
Cameroon, the Peulh and the Fulfulde (a large
minority) are doing poorly on adult literacy
and net primary enrollment. Niger’s Peul
and Tuareg face inequalities, even though the
national population is far off track. Mali is
nationally so far off track that there is seeming
equality, with all groups performing poorly.
Groups left behind in countries
otherwise performing well
Indigenous people in on-track middle-income
countries are also being left behind. A few
examples will suffice. Mexico, a middle-
income country and an Organisation for Eco-
nomic Co-operation and Development mem-
ber, is on track to meet most of the MDGs. But
under-five mortality for indigenous groups is
at 52 per 1,000 live births—almost twice the
27 for nonindigenous groups. In addition, the
poorest municipalities, heavily populated by
indigenous peoples, have poor indicators for
poverty and access to education and health.
The worst-performing municipalities have a
Human Development Index similar to those in
poorer African countries: the community with
the lowest index in Mexico, the Metlatonoc, is
at about the same level as Angola and Malawi.
Perhaps it is not surprising that 98 percent of
the population there is indigenous.17
India is also on track to meet the MDGs,
but the scheduled tribes are largely off track.
Although educational enrollment rates are
fairly high for all groups, scheduled tribes
suffer from high under-five mortality, poor
access to water and sanitation, nutrition
deprivation, and low levels of adult literacy.18
Ecuador’s under-five mortality is almost
twice as high among indigenous people, at
138 per 1,000 live births versus 77 per 1,000
for nonindigenous groups.19 Vietnam, a star
performer in economic growth and poverty
reduction, does very well on the MDGs over-
all and its ethnic minorities are generally
progressing, although some are seriously off
track for adult literacy.20 Although indigenous
groups in Vietnam have seen rapid declines in
poverty, their poverty rates remain some 40
percentage points higher than those for the
rest of the population.
Lessons from progress—and
from stagnation
As we approach 2015, the daunting challenge
of reaching the last of the excluded groups
114 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N
becomes apparent. They have a tenuous con-
nection to the modern economy, likely speak
a language different from the majority, and
typically are an ethnic minority. Where such
groups make up a sizable proportion of the
population, the solution requires rapid,
broad-based economic growth and poverty
reduction. But even that may not be enough
to address multiple sources of disadvantage
from centuries of political and social exclu-
sion. Instead, a direct effort at empowerment
is required, using targeted approaches and
enforcing political and social rights.
Growth is essential for poverty
reduction
In some Asian countries, rapid poverty reduc-
tion and the relative gains of minority groups
were generated by rapid growth and fairly
low inequality in access to productive inputs
such as land and human capital.21
From the 1970s’ reforms to 1985, China’s
main strategy to reduce poverty was to focus
on rural economic growth. After 1985, how-
ever, the government, recognizing that growth
was necessary but insufficient to reduce pov-
erty, adopted a development-oriented strat-
egy, providing assistance through various
programs in poor regions. 22 Nonetheless,
BOX 4.4 Bilingual education in Guatemala
Bilingual education is an efficient public investment.
According to a crude cost–benefit exercise, a shift to
bilingual schooling for indigenous people in Guate-
mala would result in considerable cost savings because
of reduced grade repetition. The higher quality of edu-
cation would probably help students complete the pri-
mary education cycle and substantially increase total
education levels at lower cost.
The cost savings from bilingual education are esti-
mated at $5 million, equal to the cost of providing pri-
mary schooling to 100,000 students a year. A reduction
in the number of dropouts and the effect on personal
earnings would thus be significant.a
a. Patrinos and Velez 2009.
GLOBAL MONITORING REPORT 2011
direct redistributive interventions have not
been prominent in China’s efforts to reduce
poverty.23
India’s strong growth—focused since the
1980s on moving from a state-controlled,
inward-looking economy to an outward-
oriented, market-led economy—has not been
damped by its poorly performing targeted
programs.24 Similarly, Vietnam’s remarkable
gains in economic growth and poverty reduc-
tion were the product of market reforms and a
loosening of state control.25 It was only after
growth was established that policy makers
turned their attention to poverty reduction
strategies and ethnic minority development;26
and, even then, such programs focused on
developing local economic activities rather
than targeting the poor, as in Latin America.
Latin American countries with large indig-
enous populations also have had some suc-
cess in equalizing human capital and expand-
ing access to basic services, starting from
very unequal conditions. Indigenous people
often have political representation, and their
rights are generally well established. All Latin
American countries but one have national
bilingual education programs, 27 some of
which may benefit indigenous populations
(box 4.4). And 17 have conditional cash
transfer (CCT) programs.28
Despite these efforts, slow growth has
hampered progress in overall poverty reduc-
tion and more equitable income distribu-
tion. 29 The Latin American countries with
the largest indigenous populations expe-
rienced per capita growth rates of no more
than 1 percent in the 1990s and not much
more since then. High inequality, slow
growth, and little participation by indigenous
peoples in the economic progress that did
occur meant that indigenous peoples made
little progress in poverty reduction. Most
distributive programs, as currently designed
and implemented, have not reduced poverty
among indigenous people. One significant
exception is Mexico’s CCT program Opor-
tunidades, an important part of the country’s
antipoverty program that has benefited indig-
enous people disproportionately (box 4.5). It
is characterized as well targeted (to the poor,
GLOBAL MONITORING REPORT 2011 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N 115

MAP 4.2 For girls in some African countries, secondary education remains elusive
IBRD 38448
APRIL 2011
Gender parity (secondary)

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Monaco Tajikistan
of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Ghana Nigeria Ethiopia Sri Micronesia
R.B. de Guyana Sierra Leone Côte Central Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
Gender parity (secondary) New
Dominican Puerto British Virgin
Poland Percentage of girls to boys enrolled at Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep. secondary level in public and private schools
U.S. Virgin Islands Antigua and Barbuda Slovak Rep.
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary
<79.9
and Nevis
Dominica Slovenia Romania 80–89.9
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and 90–94.9
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino 95–99.9

Montenegro Kosovo
Grenada FYR ≥100
Italy Macedonia
Trinidad Vatican Albania
R.B. de Venezuela
and Tobago City Greece no data

MDG performance

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Monaco Tajikistan of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Pakistan Bhutan
Bahrain Nepal
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola Malawi
Zambia Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina MDG performance
New
Dominican Puerto British Virgin
Poland
MDG 3.A Eliminate gender disparity in Zealand
Germany

Republic Rico (US) Islands (UK)

Secondary education, preferably by 2005,
Ukraine

Anguilla (UK) Czech Rep.

U.S. Virgin Islands Antigua and Barbuda Slovak Rep. and at all levels of education no later than 2015
(US) Austria
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Hungary
and Nevis Slovenia on target
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia close to target
(Neth) Bosnia and
Bonaire St. Vincent and
St. Lucia San Herz. Serbia
Aruba far from target
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino This map was produced by the Map Design Unit of The World Bank.
Montenegro Kosovo
Grenada
Italy
FYR no data The boundaries, colors, denominations and any other information
shown on this map do not imply, on the part of The World Bank
Trinidad Macedonia
and Tobago Vatican Albania Group, any judgment on the legal status of any territory, or any
R.B. de Venezuela City Greece endorsement or acceptance of such boundaries.

Source: World Bank staff calculations based on data from the World Development Indicators database.
116 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S
BOX 4.5 Examples of successful targeted programs
CCT programs have become very popular for attack-
ing poverty. They provide assistance conditioned on
the beneficiary’s actions—that is, the government
provides money only to beneficiaries who fulfi ll cer-
tain criteria, such as enrolling children in school,
ensuring that they attend regularly and complete
grades, and receiving regular medical attention. CCTs
have become the largest social assistance program in
some countries, covering millions of households—for
example, in Brazil (Bolsa Família) and Mexico.a
The program in Mexico—PROGRESA (now
Oportunidades)—started early (1997) and evolved
thoughtfully. The program produced successive
waves of data to evaluate its impact and put the data
in the public domain. Hundreds of studies attest to
its success in confronting poverty and disadvantage.
Although targeted generally to the poor, the program
has improved indigenous children’s schooling attain-
ment relative to Spanish-speaking or bilingual chil-
dren (see figure at right). Before the program, indig-
enous children had lower school attainment than did
Spanish-speaking or bilingual children. After three
years of implementation, school attainment among
indigenous children increased, reducing the gap.
Ecuador’s CCT—Bono de Desarrollo Humano—also
among whom the indigenous in Mexico are
overrepresented), transparent, and evidence
based—with the results of impact evaluations
used to adjust and improve it.
The differing experiences in China and
Latin America underline the importance of
growth for poverty reduction. 30 Consider-
able reductions in poverty can be achieved
through rapid growth, at least at first. But
given the typical widening of inequality with
rapid development (as in China and India),
there is a desperate need to design effective
programs that target underprivileged groups.
This is one area where Asia can learn from
the successes of such programs in Latin
America (including Oportunidades and a
similar program in Brazil)31 that combine
careful identification of beneficiary groups,
transparent program delivery, and learning
from experience.
GLOBAL MONITORING REPORT 2011
average years of schooling, 8- to 12-year-olds
4
3
2
1
0
indigenous bilingual Spanish
(monolingual) (monolingual)
1997 1999
Sources: Bando, Lopez-Calva, and Patrinos 2005; Godoy et al. 2005, 2006.
recorded success in reaching indigenous populations.b
Cambodia’s Education Sector Support Project has a
CCT that targets ethnic minorities. Exported from
the developing world to the developed, CCTs have
also been used in New York City and for indigenous
communities in Australia.
a. Fiszbein and Schady 2009.
b. Ibid.
Empowering indigenous people can
improve their development prospects
To properly empower vulnerable groups so
that broad-based growth and targeted pov-
erty reduction programs work in their favor,
the groups need greater political representa-
tion and greater voice. Political representation
in legislatures or parliaments, for instance,
could significantly increase their say in the
design of programs and delivery of services.
It could also ensure that they are referred to
in plans to achieve the MDGs and that they
are consulted in the development and design
of national programs.
Although beneficial, effecting change
through the political process takes time, as
made evident in Latin America. Empowering
stakeholders directly—for example, enabling
parents to influence school policies or patients
GLOBAL MONITORING REPORT 2011 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S
to choose health providers—holds more
immediate promise. In Mexico, parents are
given the right to exercise voice and decision-
making authority over the use of small sums
of money for improving schooling in rural
areas. These programs target disadvantaged
and poorly performing schools, including a
substantial number that provide services to
indigenous groups. A randomized evalua-
tion of one such program shows that parental
pressure produced efficiency gains, increasing
access and improving test scores.32
To work, such empowerment must be
accompanied by real efforts to generate,
use, and disseminate disaggregated data and
information on vulnerable groups—some-
thing that can be done well only to the extent
that those groups play a role in conceptualiz-
ing and implementing the data gathering, and
in formulating policy.
Although much of the economic disad-
vantage of indigenous and excluded groups
is the result of lower human capital, there
is also evidence of labor market discrimi-
nation. 33 In decompositions of the earnings
gap, the portion of the difference between
indigenous and nonindigenous peoples that is
“unexplained”—perhaps because of discrim-
ination or other unidentified factors—repre-
sents one quarter to more than one half of the
total differential. This means that although
about half the earnings differential can be
influenced by improvements in human capital
(education, skills, and abilities that an indig-
enous person brings to the labor market),
another half may result from discriminatory
labor market practices or other factors over
which the indigenous person has little con-
trol. So efforts to empower excluded groups
and increase their human capital need to look
at how the labor market can be made more
fair for them.
Small and largely untouched
groups
Indigenous peoples across the globe have very
different exposures to nonindigenous peoples
and varying degrees of cooperation with gov-
ernments and government programs. It is
hard to design programs that would benefit
117
those who are least exposed to a modern
national economy and allow them to main-
tain their identity and choice of livelihood.
The prime consideration of such programs is
the need to tread lightly and be well informed
by on-the-ground research.
Indigenous peoples have dealt with the
expansion of western influence and market
systems in at least two broad ways: some
have confronted the expansion and either
adapted to it or been deracinated, and oth-
ers have retreated farther into the backlands
to avoid exposure and deal with the modern
world at arm’s length. 34 We know a great
deal about the vulnerability and well-being of
the fi rst group, but little about the second.35
Nor is it clear what role, if any, the govern-
ment should play in enhancing the well-being
of people who eschew the modern economy.
Two examples illuminate the issues.
Persistent poverty in Central Africa
Among the oldest inhabitants of Africa, the
Pygmy peoples lead a nomadic or semino-
madic lifestyle (depending on the country)
that has persisted largely unchanged for
thousands of years, with livelihoods based on
hunting, fishing, and gathering wild fruits and
nuts. Because of urbanization and deforesta-
tion, however, many Pygmies have become
sedentary, leaving them disadvantaged and
vulnerable. In the Democratic Republic of
Congo, for example, Pygmies have tradition-
ally been closely attached to the rain forest—
the source of their spirituality, livelihood,
and protection. They once lived in camps of
30–40 families, maintaining regular links
with each other. But today their lifestyle is in
danger, as they become more sedentary, lose
access to the forest, and face a deteriorating
relationship with Bantu farmers. Census data
for the Central African Republic and Gabon
show that Pygmies lag behind the general
population in wealth, education, and access
to basic infrastructure.
Their poverty rates are extremely high. In
the Democratic Republic of Congo, 85 per-
cent of the Pygmy population is estimated to
be poor, compared with 72 percent of the gen-
eral population.36 Unemployment is typically
118 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S
lower among Pygmies, perhaps because they
are so poor that they cannot afford not to
work. But the share of workers who are not
paid cash for their work is much higher, sug-
gesting low-productivity jobs.
School enrollment rates and average years
of schooling among Pygmies in the Central
African Republic and Gabon are dramatically
lower than among other groups. The Central
African Republic’s gross primary enrollment
is only 21 percent for Pygmies, compared
with 73 percent for nonindigenous peoples;
Pygmy men average 0.3 years of schooling
and women average 0.1 years, compared
with 2.8 years for non-Pygmy men and 1.4
years for non-Pygmy women. Gabon’s gross
secondary enrollment is only 4 percent for
Pygmies, but 80 percent for non-Pygmies;
and the average years of schooling are 3.0
for men and 2.8 for women among Pygmies,
compared with 6.5 years for both non-Pygmy
men and women. Lower school enrollment
among Pygmies may result from high cost,
distance to schools, weaker cultural empha-
sis, and the need for children to work.
Pygmies in the Central African Republic
and Gabon are less likely to have access to
safe water and electricity; more likely to live
in a dwelling with walls, roof, or floor made
of temporary materials; and less likely to have
adequate sanitation. Even compared with
other rural households, Pygmies in Gabon
fare worse in all housing dimensions.
In the Central African Republic, the share
of households living in a village or area with
a health facility is smaller for Pygmies than
for the population as a whole, although the
differences in distances to health facilities are
small. Access to condoms is much lower for
Pygmies; and the share of households that
lost a member to a long-term illness is higher
among Pygmies than among the overall pop-
ulation (although the share of households that
have lost a member to HIV/AIDS is smaller).
The Pygmies embody a valuable cultural
heritage that should be protected and pre-
served, one of the most original forms of
human adaptation to the ecology of the rain
forest. They have a sophisticated knowledge
GLOBAL MONITORING REPORT 2011
of their environment and the possibilities for
humans to adapt to it sustainably. They are
increasing their integration into broader soci-
ety as they become more sedentary, and this
process—unmanaged and with little input
from the Pygmies—is linked to their impov-
erishment, exploitation, and poor health and
education outcomes. Although these findings
do not point to specific policies that the gov-
ernment could implement to improve Pyg-
mies’ living conditions, they do suggest the
need for more qualitative and institutional
analysis of measures to target this especially
vulnerable group.
Lack of interaction with wider society:
the case of the Tsimane’ of Bolivia
The Tsimane’, a native Amazonian society of
foragers and farmers in Bolivia, provide an
intriguing example of the benefits and costs
when an indigenous group exercises signifi-
cant autonomy in its exposure to the outside
world. Active withdrawal into the backlands
and collaboration with Protestant missionar-
ies since the late 1940s have enabled Tsimane’
to retain a great deal of their traditional cul-
ture and territory.37 They show no change in
core cultural values38 or in ethnobotanical
knowledge,39 although a more recent unpub-
lished study by Reyes-García et al.40 suggests
they may be losing that knowledge at the rate
of 2 percent a decade.
Close to 75 percent of the population
follows the traditional preferential system
of cross-cousin marriage (that is, a man
marries his mother’s brother’s daughter or
father’s sister’s son),41 which produces a
tight endogamic group. With ample access to
farmlands, Tsimane’ daily personal income
(adjusted for inflation and in purchasing
power parity) reaches $9 a day per person,
much higher than the international poverty
line of $1–$2 a day.42 And, over the period
2002– 06, many indicators of individual
well-being improved, including real income,
real wealth, consumption, body-mass index,
social capital, and happiness.43 Little wonder
that permanent outmigration is rare; but they
GLOBAL MONITORING REPORT 2011 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S
are being encroached on by highland colonist
farmers, cattle ranchers, and logging and oil
firms.44
Tsimane’ experience little damage in
physical stature,45 widespread parasitism46
and child growth stunting, and vulnerabil-
ity to adverse weather conditions (such as
excessive rainfall). Such events during gesta-
tion, infancy, and early childhood suppress
adult physical stature, particularly among
women.47 And when adverse shocks strike
households (illness, theft, crop loss, floods),
people weather them on their own, without
help from kith, kin, or formal institutions.
That suggests the Tsimane’ remain poorly
insured against mishaps that strike either the
individual or the village.
Conclusions
Indigenous groups make up a sizable share of
the world’s people and even a greater share of
the world’s poor. But their isolation reduces
their gains from overall growth and makes
them difficult to reach through targeted pov-
erty programs. As we come closer to 2015,
reaching even more isolated people will
become progressively more difficult. Address-
ing their needs will require widespread and
sustainable economic growth and poverty
reduction, along with strategies to reach those
who need a special lift. Helping indigenous
groups will require better understanding of
their needs and of how they interact with the
modern economy.
Nevertheless, some programs have improved
their lot. For example, well-implemented
bilingual education programs promote school
completion and subsequent earnings gains,
thus contributing to multiple goals; and these
programs can be cost effective. CCT pro-
grams can promote schooling, health, and
poverty reduction goals; and in countries
with large vulnerable populations, CCTs
show disproportionate gains for the minority
population. Empirical research suggests that
investments in early childhood development
and improving school attendance and com-
pletion are the most promising means of
119
breaking the intergenerational transmission
of social exclusion.
The international community needs a
knowledge base of what specific programs
and policies work best, and for which vul-
nerable populations. It is widely held that
outright discrimination may explain some
of the observed differential in poverty out-
comes among minority groups,48 and there
is evidence consistent with labor market dis-
crimination against indigenous peoples.49 But
overt tests for discrimination against indig-
enous peoples (such as tests in the United
States comparing call-back rates for blacks
and whites with otherwise similar profiles)50
are distinctly lacking.
To properly address the needs of the
world’s excluded populations, more and bet-
ter data are needed. That is, one needs to
analyze disaggregated data that are collected
regularly and consistently. This data collec-
tion and analysis effort can only be done
successfully to the extent that the minority
populations play a role, thus ensuring cover-
age and relevance.
Extending the gains from development to
indigenous people will not be easy. It will be
necessary to continue progress in overall pov-
erty reduction; to overcome physical, institu-
tional, and social obstacles to their participa-
tion in broader society; and to empower them
by supporting their political and social rights.
Notes
1. In formal terms, “indigenous” is more suit-
able for describing socially excluded groups
in the western hemisphere and other areas of
mass migration than in areas where majority
groups have been in place for many centuries.
However, “indigenous peoples” has been used
generally to refer to socially excluded groups,
and we will continue that usage here.
2. Hall and Patrinos 2011.
3. Ibid 2011. This gap is expressed as the money
required to raise the poor from their present
income to the poverty line, as a proportion of
the poverty line, and averaged over the total
population.
120 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S GLOBAL MONITORING REPORT 2011

4. Garcia-Moreno and Patrinos forthcoming. 49. Daley and Lui 1995; Patrinos and Sakellariou
5. Ravallion 2010. 1992; Brosnan 1984; Kimmel 1997; Hall and
6. Das et al. forthcoming. Patrinos 2006; Ohenjo et al. 2006.
7. Hoff and Pandey 2004; UNESCO 2010. 50. Bertrand and Mallainathan 2003.
8. For example, Alesina et al. 2003.
9. Lewis and Lockheed 2006.
10. WHO 2010, p. 8. References
11. Parodi, Muñoz, and Sanhueza 2010.
12. UN 2010b. Alesina, A., A. Devleeschauwer, W. Easterly, S.
13. Lewis and Lockheed 2006, p. 8. Kurlat, and R. Wacziarg. 2003. “Fraction-
14. Das et al. forthcoming. alization.” Journal of Economic Growth 8:
15. King and Van de Walle forthcoming. 155–94.
16. Figure 1.3 and table 1.1 in chapter 1 and table Bando, R., L. F. Lopez-Calva, and H. A. Patrinos.
A1.1 in the appendix show the countries by 2005. “Child Labor, School Attendance, and
MDG status. Indigenous Households: Evidence from Mex-
17. Borja-Vega, Lunde, and Garcia Moreno 2007. ico.” Policy Research Working Paper 3487,
18. Das et al. 2010. World Bank, Washington DC.
19. MacDonald forthcoming. Baulch, B., T.T.K. Chuyen, D. Haughton, and J.
20. Dang 2010. Haughton. 2007. “Ethnic Minority Develop-
21. Ravallion 2010. ment in Vietnam.” Journal of Development
22. World Bank 2009. Studies 43 (7): 1151–76.
23. Ravallion 2010. Becker, G. S. 1971. The Economics of Discrimi-
24. Ravallion 2010; Lanjouw and Ravallion nation. 2nd edition. Chicago: University of
1999. Chicago Press.
25. Dollar, Glewwe, and Litvack 1998. Ben-Achour, A., P. Backiny-Yetna, and Q. Wodon.
26. Baulch et al. 2007. 2011. “Socioeconomic Status of the Pygmies in
27. Hall and Patrinos 2006. the Democratic Republic of Congo.” Unpub-
28. Fiszbein and Schady 2009. lished manuscript, Human Development Net-
29. Hall and Patrinos 2011. work, World Bank, Washington, DC.
30. See, for example, Dollar and Kraay (2002). Bertrand, M., and S. Mallainathan. 2003. “Are
31. Ravallion 2010. Emily and Greg More Employable Than Lak-
32. Gertler, Patrinos, and Rodríguez-Oreggia isha and Jamal? A Field Experiment on Labor
2010. Market Discrimination.” Working Paper 9873,
33. Nopo, Chong, and Moro 2010; Patrinos, National Bureau of Economic Research, Cam-
Skoufias, and Lunde 2010; Hall and Patrinos bridge, MA.
2006; Psacharopoulos and Patrinos 1994. Borja-Vega, C., T. Lunde, and V. Garcia-Moreno.
34. Godoy et al. 2005; Rubio et al. 2009. 2007. “Economic Opportunities for Indigenous
35. But see Scott (2009), who provides a compre- People in Mexico.” Background paper for the
hensive overview of various Southeast Asia study Economic Opportunities for Indigenous
groups who have avoided contact with mod- Peoples in Latin America, Conference Edition.
ern society. World Bank, Washington, DC.
36. Ben-Achour, Backiny-Yetna, and Wodon 2011. Brosnan, P. 1984. “Age, Education and Maori-
37. Huanca 2008; Ringhofer 2009. Pakeha Income Differences.” New Zealand
38. Rubio et al. 2009. Economic Papers 18: 49–61.
39. Godoy, Reyes-García, Broesch et al. 2009. Daley, A. E., and J. Lui. 1995. “Estimating the
40. Reyes-García et al. 2009. Private Rate of Return to Education for Indig-
41. Godoy, Eisenberg et al. 2008. enous Australians.” Discussion Paper 97, Cen-
42. Godoy et al. 2005. tre for Aboriginal Economic Policy Research,
43. Godoy, Reyes-García, Gravlee et al. 2009. Australian National University, Canberra.
44. Reyes-García and others 2010. Dang, H.-A. H. 2010. “Growth in Vietnam Is
45. Godoy et al. 2006. Strong But Not Shared Equitably across Ethnic
46. Tanner et al. 2009. Groups.” Indigenous Peoples Country Brief
47. Godoy, Tanner et al. 2008. (Vietnam) No. 1, World Bank, Washington,
48. Becker 1971. DC.
GLOBAL MONITORING REPORT 2011 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S
Das, M. B., G. Hall, S. Kapoor, and D. Nikitin.
2010. “India’s Adivasis.” Indigenous Peoples
Country Brief (India) No. 4, World Bank,
Washington, DC.
——— . Forthcoming. “India: The Scheduled
Tribes” In Indigenous Peoples, Poverty and
Development, ed. G. Hall and H. A. Patrinos.
Cambridge, UK: Cambridge University Press.
de Laat, J. 2010. “Economic Costs of Roma
Exclusion.” Europe and Central Asia Topic
Brief, Human Development Department,
World Bank, Washington DC.
Dollar, D., P. Glewwe, and J. Litvack, eds. 1998.
Household Welfare and Vietnam’s Transition.
Washington, DC: World Bank.
Dollar, D., and A. Kraay. 2002. “Growth Is Good
for the Poor.” Journal of Economic Growth 7
(3): 195–225.
Fiszbein, A., and N. Schady. 2009. Conditional
Cash Transfers: Reducing Present and Future
Poverty. Washington DC: World Bank.
Garcia-Moreno, V., and H. A. Patrinos. Forth-
coming. “Education and Poverty in Mexico:
Indigenous Peoples.” Teachers College, Colum-
bia University, New York; and Human Devel-
opment Department, World Bank, Washing-
ton, DC.
Gertler, P., H. A. Patrinos, and E. Rodríguez-Oreg-
gia. 2010. “Parental Empowerment in Mex-
ico: Randomized Experiment of the Apoyos
a la Gestión Escolar (AGE) in Rural Primary
Schools in Mexico: Preliminary Findings.”
Unpublished manuscript, Human Development
Network, World Bank, Washington, DC.
Godoy, R., D.T.A. Eisenberg, V. Reyes-García,
T. Huanca, W. R. Leonard, T. W. McDade,
and S. Tanner. 2008. “Assortative Mating and
Offspring Well-Being: Theory and Empirical
Findings from a Native Amazonian Society in
Bolivia.” Evolution and Human Behavior 29:
201–10.
Godoy, R., W. R. Leonard, V. Reyes-Garcia, E.
Goodman, T. McDade, T. Huanca, S. Tanner,
and V. Vadez. 2006. “Physical Stature of Adult
Tsimane’ Amerindians, Bolivian Amazon, in
the 20th Century.” Economics and Human
Biology 4: 184–205.
Godoy, R., V. Reyes-García, J. Broesch, I. C. Fitz-
patrick, P. Giovannini, M. R. M. Rodríguez, T.
Huanca, W. R. Leonard, T. W. McDade, and
S. Tanner. 2009. “Long-Term (Secular) Change
of Ethnobotanical Knowledge of Useful Plants:
Separating Cohort and Age Effects.” Journal
of Anthropological Research 65 (1): 51–67.
121
Godoy, R., V. Reyes-García, C. C. Gravlee, T.
Huanca, W. R. Leonard, T. W. McDade, and
S. Tanner. 2009. “Moving Beyond a Snapshot
to Understand Changes in the Well-Being of
Native Amazonians.” Current Anthropology
50 (4): 563–73.
Godoy, R., V. Reyes-García, T. Huanca, W. R.
Leonard, V. Vadez, C. Valdés-Galicia, and
D. Zhao. 2005. “Why Do Subsistence-Level
People Join the Market Economy? Testing
Hypotheses of Push and Pull Determinants in
Bolivian Amazonia.” Journal of Anthropologi-
cal Research 61 (2): 157–78.
Godoy, R., S. Tanner, V. Reyes-García, W. R.
Leonard, T. W. McDade, M. Vento, J. Broesch,
I. C. Fitzpatrick, P. Giovannini, T. Huanca,
and N. Jha. 2008. “The Effect of Rainfall dur-
ing Gestation and Early Childhood on Adult
Height in a Foraging and Horticultural Society
of the Bolivian Amazon.” American Journal of
Human Biology 20 (1): 23–34.
Hall, G., and H. A. Patrinos, eds. 2006. Indigenous
Peoples, Poverty and Human Development in
Latin America. London: Palgrave Macmillan.
——— . 2011. Indigenous Peoples, Poverty and
Development. Cambridge, UK: Cambridge
University Press.
Hartley, B. 2008. “MDG Reports and Indigenous
Peoples: A Desk Review.” Report prepared for
the Secretariat of the United Nations Perma-
nent Forum on Indigenous Issues, New York.
Heckman, J. J. 2006. “Skill Formation and the
Economics of Investing in Disadvantaged Chil-
dren.” Science 312: 1900–02.
Hoff, K., and P. Pandey. 2004. “Belief Systems
and Durable Inequalities: An Experimental
Investigation of Indian Caste.” Policy Research
Working Papers 3351, World Bank, Washing-
ton DC.
Huanca, T. 2008. Tsimane’ Oral Tradition, Land-
scape, and Identity in Tropical Forest. La Paz,
Bolivia: Imprenta Wagui.
Kimmel, J. 1997. “Rural Wages and Returns
to Education: Differences between Whites,
blacks, and American Indians.” Economics of
Education Review 16 (1): 81–96.
King, E. M., and D Van de Walle. Forthcoming.
“Laos: Ethno-Linguistic Diversity and Disad-
vantage.” in Indigenous Peoples, Poverty and
Development, ed. G. Hall and H. A. Patrinos.
Cambridge, UK: Cambridge University Press.
Kremer, M., E. Miguel, and R. Thornton. 2009.
“Incentives to Learn.” Review of Economics
and Statistics 91 (3): 437–56.
122 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S
Lanjouw, P., and M. Ravallion. 1999. “Benefit
Incidence, Public Spending Reforms, and the
Timing of Program Capture.” World Bank
Economic Review 13 (2): 257–73.
Lewis, M. A., and M. E. Lockheed. 2006. Inexcus-
able Absence: Why 60 Million Girls Still Aren’t
in School and What to Do about It. Washing-
ton DC: Center for Global Development.
MacDonald, K. Forthcoming. “Indigenous Peo-
ples and Development Goals: A Global Snap-
shot.” in Indigenous Peoples, Poverty and
Development, ed. G. Hall and H. A. Patrinos.
Cambridge, UK: Cambridge University Press.
Nopo, H., A. Chong, and A. Moro, eds. 2010.
Discrimination in Latin America: An Eco-
nomic Perspective. Washington DC: World
Bank.
Ohenjo, N., R. Willis, D. Jackson, C. Nettleton,
K. Good, and B. Mugarura. 2006. “Health
of Indigenous People in Africa.” Lancet 367:
1937–46.
OSI (Open Society Foundation). 2010. No Data—
No Progress: Country Findings. Data Collec-
tion in Countries Participating in the Decade
of Roma Inclusion 2005–2015. New York.
Parodi C. T., S. Muñoz, and A. Sanhueza. 2010.
“Acceso y gasto de salud para grupos étnicos/
raciales en la región de las Américas.” World
Health Report 2010 background paper, no.
46. http://www.who.int/healthsystems/topics/
financing/healthreport/whr_background/en.
Patrinos, H. A. 2007. “Living Conditions of Chil-
dren.” In Solutions for the World’s Biggest
Problems: Costs and Benefits, ed. B. Lomborg,
358–75. Cambridge, UK: Cambridge Univer-
sity Press.
Patrinos, H. A., and C. N. Sakellariou. 1992.
“North American Indians in the Canadian
Labour Market: A Decomposition of Wage Dif-
ferentials.” Economics of Education Review 2
(3): 257–66.
Patrinos, H. A., E. Skoufias, and T. Lunde. 2010.
“Social Networks among Indigenous Peoples
in Mexico.” Latin American Research Review
45 (2): 49–67.
Patrinos, H. A., and E. Velez. 2009. “Costs and
Benefits of Bilingual Education in Guatemala:
A Partial Analysis.” International Journal of
Educational Development 29 (6): 594–98.
Psacharopoulos, G., and H. A. Patrinos, eds.
1994. Indigenous People and Poverty in Latin
America: An Empirical Analysis. Washington,
DC: World Bank.
Ravallion, M. 2010. “A Comparative Perspective
on Poverty Reduction in Brazil, China and
GLOBAL MONITORING REPORT 2011
India.” World Bank Research Observer 26 (1):
71–104.
Reyes-García, V., E. Kightley, I. Ruiz-Mallén,
N. Fuentes-Peláez, K. Demps, T. Huanca,
and M. Martínez-Rodríguez. 2009. “School-
ing and Local Environmental Knowledge: Do
They Complement or Substitute Each Other?”
Unpublished manuscript, Tsimane’ Amazonian
Panel Study, Brandeis University, Waltham,
MA.
Reyes-García, V., M. Orta-Martínez, M. Gueze,
A. C. Luz, J. Paneque-Gálvez, M. J. Macía, J.
Pino, J. Cristobal, and TAPS Bolivian Study
Team. 2010. “Does Participatory Mapping
Increase Conflict? A Randomized Experimen-
tal Evaluation in the Bolivian Amazon.” TAPS
working paper 59. http://tsimane.org/research/
pgs/workingpapers.html.
Ringhofer, L. 2009. Fishing, Foraging and Farm-
ing in the Bolivian Amazon: On a Local Soci-
ety in Transition. New York: Springer.
Ringold, D., M. A. Orenstein, and E. Wilkens.
2005. Roma in an Expanding Europe: Break-
ing the Poverty Cycle. Washington DC: World
Bank.
Rubio, K., E. Undurraga, O. Magvanjav, C. Grav-
lee, T. Huanca, W. R. Leonard, T. W. McDade,
V. Reyes-García, S. Tanner, R. Godoy, and
TAPS Team. 2009. “Modernization and Cul-
ture Loss: A Natural Experiment among Native
Amazonians in Bolivia.” Tsimane’ Amazonian
Panel Study Working Paper. http://tsimane.org/
research/pgs/workingpapers.html.
Schlotter, M. 2010. “The Relationship between
Human Capital Quality, Governance and
Educational Institutions: First Steps towards
a Panel Approach.” Unpublished manuscript,
Human Development Network, World Bank,
Washington, DC.
Scott, J. 2009. The Art of Not Being Governed:
An Anarchist History of Upland Southeast
Asia. Yale Agrarian Studies Series. New Haven,
CT: Yale University Press.
Tanner, S., W. R. Leonard, T. W. McDade, V.
Reyes-García, R. Godoy, and T. Huanca.
2009. “Influence of Helminth Infections on
Childhood Nutritional Status in Lowland
Bolivia.” American Journal of Human Biol-
ogy 21: 651–56.
Telles, E. E. 2007. “Race and Ethnicity and Latin
America’s United Nations Millennium Devel-
opment Goals.” Latin American and Carib-
bean Ethnic Studies 2 (2): 185–200.
UN (United Nations). 1981. “Study of the Prob-
lem of Discrimination against Indigenous
GLOBAL MONITORING REPORT 2011 A S S I S T I N G I N D I G E N O U S A N D S O C I A L LY E X C L U D E D P O P U L AT I O N S
Populations.” Final Report submitted by the
Special Rapporteur, Jose R. Martinez Cobo,
United Nations Economic and Social Council,
Commission on Human Rights, Sub-Commis-
sion on Prevention of Discrimination and Pro-
tection of Minorities, 34th session, E/CN.4/
Sub.2/476, New York.
——— . 2009. State of the World’s Indigenous
Peoples. New York.
——— . 2010a. Human Rights and the Mil-
lennium Development Goals in Practice: A
Review of Country Strategies and Reporting.
New York.
——— . 2010b. The Millennium Development
Goals Report. New York.
UNESCO (United Nations Educational, Scientific,
and Cultural Organization). 2010. Education
123
for All Global Monitoring Report 2010:
Reaching the Marginalized. Oxford, UK:
Oxford University Press.
WHO (World Health Organization). 2010. World
Health Report 2010: Health Systems Financ-
ing: The Path to Universal Coverage. Geneva,
Switzerland.
World Bank. 2009. “From Poor Areas to Poor
People: China’s Evolving Poverty Reduc-
tion Agenda. An Assessment of Poverty and
Inequality in China. Washington, DC.
——— . 2010. “Roma Inclusion: An Economic
Opportunity for Bulgaria, Czech Republic,
Romania and Serbia.” Policy Note, Human
Development Sector Unit, Europe and Central
Asia Region, Washington, DC.
 5
Progress in the
International Development
and Trading Framework

T
he global economy has weathered
the fi nancial crisis, but the recovery
remains fragile. Governments and
international institutions cooperated in the
face of recession, thus avoiding the perils of
a protectionist spiral, maintaining aid levels,
and boosting emergency financial resources.
Because a beneficial global environment also
supports progress toward the Millennium
Development Goals (MDGs), this chapter
reviews recent changes in the international
development framework—in the context of
the gradual transformation of development
policies over the past decade.
Aid in 2010 rose in real terms over 2009,
despite fears that the sharp rise in fiscal defi-
cits during the crisis would severely constrain
donor budgets. Even so, recent research
suggests that declines in aid have tended to
deepen for a period of years following past
banking crises. Some major donor govern-
ments remained dedicated to maintaining
aid in 2010, while others announced cuts.
New donors that are not members of the
Organisation for Economic Co-operation
and Development (OECD) Development
Assistance Committee (DAC) may provide
some $12 billion to $15 billion in aid dis-
bursements a year. There is keen interest to
engage with them at the Fourth High Level
Forum on Aid Effectiveness, to be held in
Busan, Republic of Korea, at the end of
2011. The objective is to forge a new consen-
sus on development assistance coming out
of Busan—one that reflects the growing role
of non-OECD-DAC countries. Developing
countries are also receiving more assistance
from private sources. Philanthropic flows to
developing countries from the private sector
in advanced countries may have exceeded
$60 billion in 2008, more than 10 times the
amount received early in the decade.
Nonetheless, new donor flows will not
compensate for any significant fall in aid
from traditional donors, particularly if they
pursue different development priorities and
practices. The changing aid landscape could
also have implications for the transparency
of official flows and for the policies and pro-
grams that aid supports.
World trade, recovering at about double
the 2002– 08 rate of growth, remains well
below the precrisis peak and even lower than
it would have been if trade had continued to
follow the rising 1995–2008 trend. The new
protectionist measures during the crisis, which
hit the exports of least-developed countries
(LDCs), appear to be receding. Solidifying an

A human flood chokes the mud-slick remnants of a highway, the main vein for commerce through the Ituri, Democratic Republic of the Congo. Rough and rutted 125
during dry weather, the roads are nearly impassable in the wet season. But rain can’t stop the toleka traders, who push goods hundreds of miles by bicycle.
126 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
open, rules-based international trade regime
can best be accomplished by (finally) conclud-
ing the Doha Round. Efforts to increase trade
integration of the poorest developing coun-
tries should focus on extending duty-free,
quota-free access to their exports, providing
financial resources and technical assistance
to improve trade facilitation, and simplify-
ing rules of origin in preference agreements.
Regional trade agreements should support
open trade through low external tariffs, and
technical assistance to developing-country
trade negotiators would support deeper
regional integration. International efforts to
avoid a collapse in trade finance during the
crisis were timely and successful. But further
steps are required to ensure that low-income
countries can obtain trade finance at reason-
able cost, along with improvements in data
and a review of whether banking regulations
impose excessive capital requirements on
trade finance transactions.
The past tumultuous decade has ush-
ered in significant changes in the assistance
policies of the international institutions.
The multilateral development banks have
developed a results-based, country-driven
assistance framework grounded in regular
reviews of country strategy and indepen-
dent evaluations. A more diverse and flexible
range of financing facilities has helped tailor
assistance to the needs of particular countries
(such as those affected by conflict) and in par-
ticular situations (such as disaster relief and
crisis assistance). The international financial
institutions (IFIs) also are doing more in
providing knowledge in the context of loans
and technical assistance to their clients,
both through global projects and programs
and through the free provision of informa-
tion to the global community. The financing
provided to crisis-affected countries jumped
sharply with the onset of the crisis, leading to
a general increase in IFI resources.
An unprecedented decade for aid
Economic and political events since the Mil-
lennium Declaration in 2000 have reordered
the aid framework. Booming economic
growth, higher capital flows, and surging
GLOBAL MONITORING REPORT 2011
trade flows were followed by the worst eco-
nomic crisis since the Great Depression.
Wars have led to shifts in priorities among
international donors. And China and India,
with some other developing countries, have
emerged as economic powerhouses.
Over the last decade, donors reaffirmed
their commitments to increasing aid flows
and improving aid quality, as in the Monter-
rey Declaration at the 2002 Financing for
Development conference in Mexico and the
Gleneagles G-8 and Millennium +5 sum-
mits in 2005. At the September 2010 United
Nations Summit on MDGs, held in New
York, representatives of key stakeholders—
including governments, international organi-
zations, and private and public sectors—reaf-
firmed their commitment to work together to
achieve the MDGs in the five years left.
Will the crisis undermine recent
commitments?
This reaffirmation was all the more
remarkable, given the potential impact of the
crisis on donor budgets. These may be threat-
ened as high income countries struggle to
control fiscal deficits. Even so, aid flows from
DAC donors rose in 2010 (to $128.7 billion in
2010 from $119.8 billion in 2009, a 6.5 per-
cent increase in real terms). Despite various
shortfalls against commitments, the impact
of the financial crisis on aid, at least in 2009
and 2010, was relatively mild. Official devel-
opment assistance (ODA) as a percentage of
gross national income (GNI) rose from 0.26
percent in 2004 to 0.31 percent in 2009 and
to 0.32 percent in 2010.
The United States remained the largest
donor in 2009 ($28.8 billion), with France
($12.6 billion), Germany ($12.1 billion, the
United Kingdom ($11.5 billion), and Japan
($9.5 billion) following. With a net inflow
of $6.1 billion, Afghanistan was the larg-
est recipient in 2009, followed by Ethiopia
($3.8 billion), Vietnam ($3.7 billion), West
Bank and Gaza ($3.0 billion), and Tanzania
($2.9 billion) (box 5.1). The amount of aid for
debt relief and technical assistance as a share
of total net official development assistance
declined.
GLOBAL MONITORING REPORT 2011 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 127

BOX 5.1 Aid recipients

Aggregate aid flows often reflect geopolitical priorities
and/or responses to major global events. It is therefore
not a surprise that Iraq and Afghanistan were the larg-
est aid recipients over the last decade (top table below).
In per capita terms, the pattern is also mixed at the
country level. The top 10 recipients in per capita net
official development assistance in 2008 were West
Bank and Gaza ($659), Botswana ($373), Liberia
($330), Iraq ($321), Lebanon ($257), Timor-Leste
($253), Georgia ($206), Afghanistan ($168), Serbia
($142), and the Democratic Republic of Congo ($140).
Low-income countries captured the largest share
net official development assistance in 2008 and
received the highest amount in per capita terms. By
geographic region, Sub-Saharan Africa received the
highest aggregate aid flows, but it is second to the
Middle East and North Africa in per capita terms
(lower table below)

Largest aid recipients by decade

billions, constant 2008 US$
1960–69 1980–89 2000–09
India 64.7 India 42.4 Iraq 68.1
Pakistan 25.1 Egypt, Arab Rep. 31.0 Afghanistan 35.5
Algeria 20.7 Bangladesh 29.6 Nigeria 29.2
Vietnam 17.5 Israel 23.2 Ethiopia 27.4
Korea, Rep. 14.5 Indonesia 20.9 Vietnam 27.4
Brazil 13.1 Pakistan 20.5 Tanzania 25.4
Turkey 12.6 China 19.5 Congo, Dem. Rep. 24.8
Indonesia 12.4 Syrian Arab Republic 18.7 Pakistan 23.4
Congo, Dem. Rep. 8.4 Sudan 18.6 Mozambique 21.1
Israel 8.1 Tanzania 16.9 India 20.6
1970–79 1990–99 Source: DAC database.

India 44.8 Egypt, Arab Rep. 41.1

Egypt, Arab Rep. 44.8 China 33.6
Indonesia 25.1 India 25.0
Pakistan 21.2 Bangladesh 21.3
Bangladesh 19.5 Indonesia 18.9
Syrian Arab Republic 18.2 Mozambique 16.3
Vietnam 15.6 Tanzania 15.2
Israel 13.6 Israel 14.4
Jordan 12.4 Pakistan 14.0
Korea, Rep. 10.5 Ethiopia 13.3

Aid flows by income groups and region, 2008

Income groups and regions Total ($ billions) Per capita ($)

Income
Low 41.4 42
Lower middle 37.1 10
Higher middle 11.8 12
Regions
East Asia and Pacific 9.1 5
Europe and Central Asia 8.2 19
Latin America and the Caribbean 9.3 16
Middle East and North Africa 23.6 73
South Asia 12.3 8
Sub-Saharan Africa 40.1 49
Source: Word Development Indicators database.
128
FIGURE 5.1 Impact of banking crises on net disbursed aid provided
by crisis-affected donors, 1977–2007
estimated banking-crisis coefficient
–0.1
–0.2
–0.3
–0.4
Source: Dang, Knack, and Rogers 2009.
PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
The largest increases in real terms in ODA
between 2009 and 2010 were recorded by
Australia, Belgium, Canada, Japan, Korea,
Portugal, and the United Kingdom. Many
countries (for example, the United Kingdom)
have maintained their original commitments
to aid flows made at the Gleneagles G-8 and
Millennium +5 summits in 2005. Other donor
countries, however, have announced shifts in
their aid policy because aid budgets are under
strain and economic growth in many high-
income countries is slow in recovering to pre-
crisis levels. The Dutch government plans to
cut foreign aid from 0.8 percent to 0.7 per-
cent of gross national income. Ireland and
Spain have already cut their aid budgets, and
France has announced a postponement of its
commitments.
The year 2010 marked an important
target for DAC countries that are part of
the European Union. In 2005, they collec-
tively agreed to increase aid to 0.56 percent
of gross national income within five years,
with a minimum country requirement of
0.51 percent. Some countries—including
Belgium, Finland, Denmark, Ireland, Lux-
embourg, the Netherlands, Spain, Sweden,
and the United Kingdom—appear to be on
track to meet this goal.1 Others—including
Austria, France, Germany, Greece, Italy, and
0.3
0.2
0.1
0 to shift rapidly in the past five years because
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
years after onset of crisis
GLOBAL MONITORING REPORT 2011
Portugal—appear unlikely to reach it. Simi-
larly, the United States set the goal of dou-
bling its aid to Sub-Saharan Africa between
2004 and 2010. It achieved this in 2009.
Japan, by contrast, fell short of its Gleneagles
promise that its aid during 2005–09 would
equal $10 billion more than if it had remained
at the 2004 level, owing to serious budgetary
constraints.
Overall, donor countries have remained
pretty much on track in meeting their aid
commitments, despite the economic down-
turn. But we will only really know the true
impact of the crisis on aid several years down
the road. Reinhart and Rogoff argue that the
full impact on aid flows of a recession fol-
lowing a banking crisis can be felt for sev-
eral years after the crisis, owing to enduring
effects of the crisis on the country’s fiscal
position and growth prospects. 2 Similarly,
Dang, Knack, and Rogers find that aid flows
during 1977–2007 fell by 20–25 percent, on
average, from donor countries with bank-
ing crises, beyond any income-related effects
(figure 5.1).3 And the effects can last as long
as 10 years after the onset of a crisis.4 Is this
pattern going to repeat itself?
New donors appear on the scene
During most of the last half of a century,
DAC donors, with international organiza-
tions, accounted for most aid flows. Since
1960, the United States, Japan, Germany,
France, and the United Kingdom have been
the largest donors in absolute terms; and the
Nordic countries have given the most, rela-
tive to gross national income.5
But the global balance of aid has started
some developing countries’ recent strong
growth gives them more resources to share
in development. There is a clear lack of reli-
able data. Until recently, the DAC Creditor
Reporting System, which captures only a
partial picture of total aid flows, was the only
available database. DAC donors are required
to report their financial flows to the OECD,
whereas non-DAC donors can voluntarily
provide the information to the organization.
GLOBAL MONITORING REPORT 2011
Twenty non-DAC donors now report to the
OECD. Some of them—such as Saudi Ara-
bia, Thailand, and Turkey—provide sig-
nificant amounts of aid. Overall, non-DAC
donors reporting to the DAC contributed
5 percent of net aid ($6.7 billion in current
dollars) in 2009. But other non-DAC donors
making significant contributions to develop-
ment assistance are not recorded by DAC,
including Brazil, China, India, Malaysia, the
Russian Federation, and República Bolivari-
ana de Venezuela.
In total, non-DAC donors provided about
$12 billion to $15 billion in aid in 2008.6
Arab countries together would constitute the
largest non-DAC donor, contributing $5.9
billion.7 Development assistance from the
BRIC countries (Brazil, Russia, India, and
China) is estimated in the range of $2.3–$5.1
billion in fiscal 2006/07, with Chinese assis-
tance at $1.4 billion to $3.0 billion. These
figures may be underestimated. China’s aid
to Africa alone was estimated at nearly $2.5
billion in 2009.8
Flows from multilateral institutions grew
to $28 billion in 2009, and the number of
institutions has increased. There are now
more than 260 multilateral aid agencies,
including development banks, the United
Nations, and specialized funds that have
become important or have been set up in
recent years.9 These funds tend to deliver aid
with a special focus, such as HIV prevention
and treatment, vaccines, or disaster preven-
tion and relief.
Other key aid flows in recent years have
come from civil society organizations and
private philanthropists. No reliable figures
exist for total aid from this group, but one
recent estimate has their total aid reaching
$53 billion in 2008, more than 10 times the
amount early in the decade.10 The largest is
the Gates Foundation, which has a total asset
trust endowment of more than $35 billion
and annual disbursements of $3 billion to $4
billion.11 Additional work is clearly needed to
systematically gather more reliable data.
Still, the emergence of new aid flows and
actors has led to changes and increased the
complexity of the aid architecture, requiring
PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 129
a new consensus on aid effectiveness. With so
many actors, donor activities are less likely to
be coordinated effectively in recipient coun-
tries. Aid-funded projects are also likely to
follow different rules, increasing the risk of
more fragmentation and higher transaction
costs for donors and recipients. Moreover,
differences in aid policies may undermine
aid effectiveness through a lack of transpar-
ency, possible violations of international aid
and governance standards, and unfair com-
petition. Incorporating the viewpoints of new
actors is likely to enrich the discussions and
bring key voices of the international commu-
nity into this important global dialogue.
Aid effectiveness
Aid effectiveness is a critical agenda for
partner-countries, donors, and other aid
providers—including the World Bank. The
importance of results of development efforts,
including external assistance, is the fourth
pillar of new research directions at the World
Bank.12 The 2005 Paris Declaration on Aid
Effectiveness and the 2008 Accra Agenda for
Action have focused on the following prin-
ciples, intended to improve the quality and
effectiveness of aid:
1. strengthening country ownership of
development,
2. building more effective and inclusive part-
nerships for development, and
3. delivering and accounting for development
results.
Monitoring tools have been developed to
improve the accountability of donors and
aid recipients. The Survey on Monitoring the
Paris Declaration was developed to monitor
the implementation of these principles by
measuring progress against the commitments
made by both partner-countries and donors.
To measure progress between 2005 and
2010, surveys—consisting of 12 quantitative
indicators and qualitative information—were
conducted in 2006 and 2008, with the third
survey scheduled for 2011. An evaluation tool
called the Evaluation of the Implementation
130 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
of the Paris Declaration is intended to pro-
vide more comprehensive understanding of
how increased aid effectiveness contributes to
meeting development objectives (results forth-
coming in the spring of 2011).
Several assessment tools have focused on
the quality or effectiveness of donors, includ-
ing by observers such as Easterly and Pfutze,13
Roodman,14 and the Brookings Institution’s
Quality of Official Development Assistance
Assessment (QuODA, developed in 2010).
Other attempts sponsored by bilateral donors
include the Multilateral Organizational Per-
formance Assessment Network, the United
Kingdom’s Multilateral Aid Review, and
self-evaluations such as the Common Per-
formance Assessment System. More recently,
Knack, Rogers, and Eubank developed an
index to compare donor performance and
assess how well donors are delivering on
their mandates.15 Two of these assessments
are described here to provide a sense of the
results:
• In Knack, Rogers, and Eubank 2010, the
selectivity subindex reviews policies and
measures of poverty reduction, based pri-
marily on GDP per capita and the World
Bank’s Country Policy and Institutional
Assessment index. The index covers the
four most common dimensions of aid qual-
ity in the relevant literature—selectivity,
alignment, harmonization, and special-
ization. Alignment focuses on ways that
donor countries match their aid to support
country priorities and policies outlined in
country development strategies. Harmoni-
zation involves coordination among donors
that is designed to avoid duplication and
high transaction costs in recipient coun-
tries. The specialization subindex attempts
to capture the fragmentation of donor aid,
including geographic concentration of aid,
concentration of aid by sector, and average
size of projects. In the overall ranking of
the quality index (the average of the four
subindexes), Denmark came first among
bilateral donors, followed by Ireland, the
Netherlands, Sweden, and the United
Kingdom; the Asian Development Bank
GLOBAL MONITORING REPORT 2011
(ADB) scored the highest among multilat-
eral donors, followed by the World Bank,
the International Monetary Fund (IMF),
the International Fund for Agricultural
Development, and the Global Alliance for
Vaccines and Immunisation.
• The QuODA Index, compiled by Nancy
Birdsall and Homi Kharas, takes into
account four broad categories covering
30 aid-related indicators: maximizing effi-
ciency, fostering institutions, reducing the
burden on recipients, and transparency
and learning.16 Different from Knack,
Rogers, and Eubank, QuODA does not
aggregate across sectors because of the low
correlations among the four categories. It
also looks at both bilateral and multilateral
agencies. The International Development
Association (IDA) and Ireland scored in
the top 10 for all four categories.
Transparency is emerging as a major com-
ponent of aid effectiveness because it is essen-
tial to enhancing accountability. For donors,
one of the most important initiatives is the
International Aid Transparency Initiative,
which aims at establishing common global
reporting standards on aid and publishing aid
information in a way that is accessible to var-
ious stakeholders for the purposes of global
reporting and improving budget management
by partner-countries. Progress on how donors
rank on their transparency has been moni-
tored in the 2010 report on “Aid Transpar-
ency Assessment.”17 For partner-countries,
transparency in public finances is critical for
accountability. Several frameworks attempt
to measure fiscal transparency—frameworks
such as the IMF’s Good Practices on Fiscal
Transparency; the OECD’s Best Practices for
Budget Transparency; the Public Expenditure
and Financial Accountability assessments
supported by the World Bank Group (WBG);
and public sector accounting standards from
the International Federation of Accountants,
the International Organization of Supreme
Audit Institutions, and the International Bud-
get Project’s Open Budget Index.
The aim of these indexes is to give donor
countries and organizations a metric for
GLOBAL MONITORING REPORT 2011
comparison as well as an objective frame-
work for ways to improve the quality of aid
over time. But aid is measured; a more funda-
mental question remains: does aid contribute
to development at all?
The impact of aid
For decades, researchers have grappled with
the question of whether foreign aid inflows
lead to positive changes in a recipient coun-
try—economic and otherwise—and, if so,
in what form. Does aid lead to long-term
improvements in the recipient country in the
form of increased growth? Or does it harm
the economy in some way? And if it helps,
what type of aid helps best?
Resolving these questions is critical for
aid policy, particularly given the huge sums.
Some studies find that aid has a positive
impact on a country’s growth, others that a
positive impact depends on certain economic
and political factors, and still others that aid
has no impact on growth. Indicators include
macroeconomic factors, openness or trade
variables, governance and political condi-
tions, and geographic location.18 Burnside and
Dollar’s seminal paper concluded that aid has
a positive effect on growth in countries with
good policy environments.19 But according to
Doucouliagos and Paldam, no clear conclu-
sion emerges from the aid literature.20
Analyzing the effectiveness of particular
forms of aid, Clemens, Radelet, and Bhavnani
find a positive relationship between economic
growth and “short-impact aid.”21 Mavro-
tas, reviewing the impact of different types
of aid on Uganda’s fiscal sector, finds that
project and food aid reduces public invest-
ment, whereas program aid and technical
assistance increase it. 22 Reddy and Minoiu,
distinguishing between what they call devel-
opmental aid and geopolitical aid, 23 find that
the former has a strong, positive impact on
growth, and the latter has a weak but nega-
tive relationship with growth.24 Heyman, in
her sectoral analysis of the link between aid
and economic improvement, fi nds that only
humanitarian aid has a positive impact on
per capita GDP.25
PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 131
Much aid is, of course, targeted at improv-
ing health, nutrition, and education, as well
as at such nondevelopmental objectives as
disaster relief. Such interventions are primar-
ily directed at welfare, particularly of the
poor, although they also can have an impor-
tant impact on growth. For example, the
German and Irish governments’ funding for
the Kalomo cash transfer program in Zam-
bia was likely intended to reduce poverty and
malnourishment, rather than to raise GDP
directly.
Some researchers have looked at the
impact of social sector aid on country prog-
ress in achieving the MDGs. Michaelowa
and Weber fi nd aid for education (both per
capita and as a share of GDP) increases pri-
mary enrollment and completion rates. 26
Dreher, Nunnenkamp, and Thiele fi nd that
increased per capita aid for education signifi-
cantly increases primary school enrollment.27
Mishra and Newhouse, using a data set of
118 countries for 1973–2004, find that dou-
bling per capita health aid is associated with
a 2 percent reduction in the infant mortality
rate. Therefore, increasing per capita health
aid from $1.60 to $3.20 will lead to roughly
1.5 fewer deaths per 1,000 births—a lift that
is encouraging but small, relative to the MDG
targets.28
These results show that not all aid is effec-
tive. Bourguignon and Sundberg point out
the need to “open the black box” and bet-
ter understand the relationship between aid
and development outcomes. 29 This can be
done through analyses that focus on three
basic relationships: the impact of policies on
outcomes (knowledge, either ex post from
impact evaluation or ex ante from model-
ing or economic reasoning), the influence of
policy makers on policy, and the influence of
external donors and international fi nancial
institutions on policy makers.
Myriad factors play on whether aid
achieves its desired impact—or any positive
impact. Some examples include the level of
recipient-country ownership and the condi-
tions imposed by donors, the predictability of
future flows of aid, the investment climate of
the recipient country, whether aid is tied, and
132 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
the apparatus to monitor and evaluate prog-
ress. The changing aid architecture, which has
new faces, new priorities, and a new structure,
will play a major role in the next years.30 Aid
quality, together with strong international
coordination, will continue to be a focus to
improve the delivery and effectiveness of aid
and its impact on developing countries
Trade and the global economic
recovery
In the aftermath of the recent financial crisis,
trade has recently begun its path to recovery.
Sustaining it will be critical. But many devel-
oping countries continue to face considerable
challenges in reaching global markets as a
result of limited or weak trade-related infra-
structure and institutions, unfavorable busi-
ness climates, limited access to trade finance,
and protectionist restrictions. High and vola-
tile food prices also create vulnerabilities,
particularly for low-income countries with
high shares of food imports and limited fis-
cal space.
After a brief review of the ongoing trade
recovery, this section discusses the key chal-
lenges and opportunities to strengthen the
international system and enhance the abil-
ity of developing countries—particularly the
more vulnerable low-income countries—to
FIGURE 5.2 Exports have yet to recover their precrisis trend
log of real merchandise exports, US$ 2005
14
13
12
11
10
Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan Jan
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
high-income countries developing countries
Sources: Datastream; World Bank Development Prospects Group.
GLOBAL MONITORING REPORT 2011
benefit from greater trade integration. To
maintain the recent momentum toward
recovery, concerted efforts will be required
to keep protectionist tendencies in check and
to recommit to building a stronger and more
effective multilateral trading system that
serves developing countries through the con-
clusion of the Doha Round. It will be impor-
tant to ensure that regional trade agreements,
which can enhance market access, promote
open regionalism. Also needed are measures
to support access to trade fi nance and trade
facilitation to connect vulnerable low-income
countries, landlocked countries, and lag-
ging regions to regional and international
markets—and an expansion of aid for trade
to ensure that the developing countries can
implement such reforms and reap the gains of
trade integration.
Trade remains crucial after the “great”
trade collapse
World merchandise trade has recovered since
early 2009, but it remains below precrisis lev-
els (see figure 5.2). The world import value
increased nearly 30 percent since its low point
in February 2009, recovering at twice its
growth rate during 2002–08. The recovery in
trade is much faster among developing coun-
tries than among high-income countries. In the
first 10 months of 2010, high-income-country
export volumes grew at 10.4 percent a year,
compared with 15.5 percent among developing
countries. But the world import value remains
18 percent lower than the precrisis peak, even
lower than if the world economy had contin-
ued to grow at the 1995–2008 trend. The pace
of trade recovery is now decelerating, and the
prospects are unclear. Although the global
GDP growth projection for 2011 has been
revised upward (by a quarter of a point to 4.4
percent) in anticipation of stronger growth in
the United States, persistent high food prices
threaten to undermine it.
Trade bounced back in all develop-
ing regions (figure 5.3), driven by a vibrant
rebound in emerging economies. By 2010, all
developing regions recovered to their precri-
sis export volumes, with East Asia and the
GLOBAL MONITORING REPORT 2011 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 133

FIGURE 5.3 Merchandise export volume

160

140
index (Jan 1, 2007 = 100)

120

100

80

60
M1 M3 M5 M7 M9 M11 M1 M3 M5 M7 M9 M11 M1 M3 M5 M7 M9 M11 M1 M3 M5 M7 M9 M11 M1
2007 2008 2009 2010 2011

East Asia and Pacific Latin America and the Caribbean South Asia
Europe and Central Asia Middle East and North Africa Sub-Saharan Africa

Source: World Bank Development Economics Prospects Group data.

Pacific and South Asia (especially China and Benefits from global trade require
India) leading this recovery. Export volumes continuing vigilance against
in South Asia and East Asia and the Pacific protectionist tendencies
peaked higher than precrisis levels. Trade vol-
umes in the Middle East and North Africa Given the importance of trade and invest-
also rebounded, but continue to be con- ment for the global economic recovery, the
strained by the sluggish growth in their main G-20 commitment to resist all forms of pro-
markets in the European Union. The down- tectionist measures, to keep markets open,
turn in exports in Europe and Central Asia and to liberalize trade and investment to pro-
turned a corner in August 2010, led by strong mote economic progress for all is welcome.
intraregional trade that saw the region more This commitment, reiterated during the
than recover its precrisis levels by the end November 2010 meeting in Seoul, Republic
of 2010. Exports in Latin America and the of Korea, has been a centerpiece of the G-20
Caribbean remained lackluster, with sharp response to the global economic crisis. It may
drops in October 2010 in Argentina and have spared the world economy from falling
Chile as a result of strikes and disruptions in into a 1930s Depression-era scenario.
metal supply and weather-related agricultural The World Trade Organization (WTO)
shocks. Export growth in Africa has recov- reports some progress in lifting protectionist
ered from its trough during the crisis, but measures imposed in the wake of the fi nan-
remains volatile. Globally, low-income coun- cial crisis (figure 5.4). The latest WTO Trade
tries have been insulated not only from the Policy Review (November 2010) indicates
economic downturn, but also from the recov- that 415 measures were reported by mem-
ery, reflecting their lack of integration in the bers between November 2009 and October
world economy. Their exports and imports, 2010, down from 430 in the aftermath of
in both volume and value terms, remained the crisis between October 2008 and Octo-
comparatively flat during both the crisis and ber 2009. Whereas more than three-quarters
the postcrisis recovery. of the measures were trade restrictive in the
134 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK GLOBAL MONITORING REPORT 2011

FIGURE 5.4 Trade-restrictive measures have introduced since the end of 2008 now account
fallen since 2008 for about 1.9 percent of world imports.
G-20 countries remained the most active
350 instigators of restrictive—and liberalizing—
no. of trade restrictive measures

300
250
200
150
100
50
0
Oct 2008–Oct 2009
Source: WTO Trade Policy Review OV 13.
first year, newly reported restrictive measures
came down to two-thirds in the second year.
Retrenchment in protectionism since the
start of the crisis has nonetheless been slow,
as only 15 percent of the restrictive measures
introduced in 2008 have been terminated so
far. Moreover, newly imposed export mea-
sures increased by 25 percent over the same
period—primarily export bans and quotas
on agricultural products partly resulting
from higher food prices. According to WTO
estimates, total import-restrictive measures
15
20 measures. About 60 percent of the trade-
105
restrictive measures implemented between
13
25
November 2009 and October 2010 were
62
imposed by G-20 nations, led by BRICs (85
measures) with India at the head, followed by
184 high-income OECD countries (35 measures).
122
The United States had imposed the second-
Nov 2009–Oct 2010
highest number of trade-restrictive measures
in the year after the crisis but reported only
trade remedy export
four new restrictive measures in the last
border other
year. Whereas restrictions imposed in high-
income OECD countries were mainly the
result of trade remedy investigations—almost
all antidumping initiations by the European
Union—BRICs brought out both nontariff
measures and trade remedy investigations.
More detailed information on the number of
WTO member–initiated temporary trade bar-
rier investigations (antidumping, safeguards,
and countervailing duty policies) from the
World Bank’s Temporary Trade Barriers
database indicates that their number has gone
down since the third quarter of 2009 and is
back to precrisis levels (figure 5.5). But over-
all estimates of the impact of these border
and behind-the-border measures (including

FIGURE 5.5 Newly initiated trade remedy investigations have peaked

50
newly initiated trade remedy investigations

45
40
35
30
25
20
15
10
5
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007 2008 2009 2010
initiated by developing economies initiated by developed economies

Source: World Bank Temporary Trade Barriers database.

GLOBAL MONITORING REPORT 2011 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 135

bailouts and subsidies) implemented since FIGURE 5.6 Trade-restrictive and trade-liberalizing measures,
the crisis indicate that they contributed to an November 2009–October 2010
annual aggregate distortion to global trade of
at least $35 billion.31 Algeria
Armenia
The number of trade-liberalizing mea- Argentina
sures introduced in 2010 increased by 71 Australia
percent over those introduced in 2009. More Azerbaijan
Gulf Cooperation Council
than a third of the new measures were tariff Bangladesh
reductions, introduced primarily by BRICs Belarus
Belarus, Kazakhstan, Russian Federation
and lower-middle-income countries, such as Bolivia
Pakistan and Bolivia. Reductions in nontariff Brazil
measures made up a quarter of all liberalizing Canada
Chile
measures, mainly from the BRICs. Despite China
global economic uncertainty, new measures to Colombia
Costa Rica
liberalize trade increased in 2010 (figure 5.6). Dominican Republic
The LDCs are particularly harmed by Ecuador
Egypt, Arab Rep.
G-20 protectionism. New analysis by the European Union
Global Trade Alert 32 indicates that, since Honduras
November 2008, 141 trade measures imposed India
Indonesia
by countries worldwide harmed the commer- Iraq
cial interests of LDCs. Of these, about 100 Israel
Jamaica
measures (70 percent of those imposed) were Japan
introduced by G-20 members. Among the Jordan
G-20, developing countries initiated 70 per- Kazakhstan
Kenya
cent of the measures, led, in order, by India, Korea, Rep.
Argentina, Indonesia, and Russia. Among Macedonia, FYR
Malaysia
LDCs, Bangladesh has been affected by the Mercosur
largest number of measures, followed by Mexico
Tanzania, the Republic of Yemen, Senegal, Morocco
Nigeria
and Sudan. These measures may significantly Pakistan
restrict LDC exports, particularly for some Paraguay
Peru
products they specialize in, thus contravening Philippines
the undertaking at the G-20 summit. Russian Federation
Rwanda
High and volatile food prices are also
Saudi Arabia
creating vulnerabilities, particularly for low- Serbia
income countries with high shares of food South Africa
Sri Lanka
imports and limited fiscal space. Whereas indi- Sudan
vidual governments can insulate themselves to Switzerland
Taiwan, China
some degree from increases in world prices Thailand
by imposing export bans or making tactical Turkey
reductions in import tariffs, these measures Ukraine
United States
increase the volatility of world prices. Trade Uruguay
policy is generally not the appropriate instru- Venezuela, R.B. de
Vietnam
ment to achieve food security and rural devel- Yemen, Rep.
opment. High protection hurts households Zimbabwe
that are net consumers. Long-term solutions 0 10 20 30 40
restrictions liberalizing
include, among other things, higher agricul-
tural productivity to raise farmer incomes and
lower consumer prices, liberalization around Source: World Bank International Trade Department calculations based on WTO Trade Policy Review
Overview Annex 1, November 2010.
the world and commitment to multilateral Note: Of the 486 trade-related measures listed in the annex, 19 were unclassifiable because of insuf-
trade rules, public access to information on ficient information regarding their trade effect.
136 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
the quality and quantity of grain stocks, and
effective safety nets.33
Keeping markets open for LDC exports
would help lift those countries out of poverty.
Extending 100 percent duty-free, quota-free
(DFQF) access to all exports of LDCs would
promote new export opportunities for LDCs,
particularly market access for products in
which LDCs have a comparative advantage.
Although trade preference programs provide
high levels of product coverage, preferences
are often underused and exclude products
important to LDC exporters—for example,
agricultural goods (for African exporters)
and textiles, apparel, and footwear (for Asian
exporters).
Extending DFQF from 97 percent to 100
percent could have a significant impact.
Overall export gains for WTO-member
LDCs could be on the order of $2 billion if
G-20 OECD countries extended to 100 per-
cent product coverage; this amount could be
even larger if BRICs also offered full market
access. For example, full DFQF access to all
G-20 markets could increase Malawi’s GDP
by some 10 percent; for Tanzania, the ben-
efits of full DFQF granted by non-OECD
G-20 countries are double those generated
through DFQF enacted by only the OECD
members. Given the size of the economies of
low-income countries and the apparent com-
plementarities with the G-20 countries, the
additional imports are unlikely to pose undue
costs or disruptions to G-20 markets.34 More
comprehensive efforts to harmonize and coor-
dinate trade preferences would also increase
the overall effectiveness of trade preferences.
Concluding the Doha Round
The global financial crisis underlined the crit-
ical role of a multilateral, rules-based trade
system. The WTO’s monitoring and report-
ing of trade measures during the crisis helped
distinguish WTO-compatible policies from
discriminatory policies, crucial to ensuring
a transparent and fair trading system. It also
certainly contributed to restraining govern-
ments from adopting more pervasive and
numerous trade-restrictive policy measures
to curtail the domestic impact of the crisis.
GLOBAL MONITORING REPORT 2011
As unemployment rates rise despite the global
economic recovery, governments should con-
tinue to ensure that benefits of an open mul-
tilateral trading system are not compromised
by short-run pressures to protect domestic
markets. Keeping markets open will also be
paramount to countering the effects of the
withdrawal of expansionary fiscal and mon-
etary policies.
An effective and strong multilateral trad-
ing system remains critical for improving
market access and accommodating new
dynamics of trade. The structure of global
production has undergone a major trans-
formation, with global value chains much
more prevalent and elaborate, involving
more developing countries (including low-
income countries). Although weak domestic
policies, regulations, and institutions (par-
ticularly those increasing the cost of logistics)
are the main binding constraint to progress,
more gains may be achieved through a con-
certed, internationally integrated approach to
reform, given the multilateral nature of verti-
cal production chains.
Now is the right time to reach an agree-
ment on Doha. Commissioned by a group of
developed and developing economies, Peter
Sutherland and Jagdish Bhagwati made the
case for a deadline to complete the talks
before the end of 2011, highlighting three pre-
vailing conditions as opportune. First, higher
commodity prices can dissipate resistance by
farmers benefiting from subsidies. Second,
the weak recovery enhances the attraction of
a potential stimulus of approximately $360
billion on global trade. And, third, the new
global trade dynamics need to be addressed.35
Consider the growth and rising complexity of
global supply chains: they mean that today’s
protectionists are more likely to resort to
targeted rules than to tariffs, making trade
negotiators’ traditional goal of dismantling
tariffs less relevant.
The November 2010 G-20 meeting in Seoul
and the Japan summit of the Asia-Pacific Eco-
nomic Cooperation renewed hopes for prog-
ress in the Doha negotiations in the first half
of 2011. G-20 and Asia-Pacific Economic
Cooperation leaders saw a new window of
opportunity to intensify negotiations in 2011,
GLOBAL MONITORING REPORT 2011 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 137

MAP 5.1 Across the world, 884 million people lack access to safe water—around 80 percent of them in
rural areas
IBRD 38468
APRIL 2011
Access to safe water

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Armenia Rep.
United States Portugal Spain Monaco Turkey baijan Turkmenistan
Tajikistan
of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola Malawi
Zambia Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
Access to safe water New
British Virgin
Dominican Puerto Poland Percent of population without access Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep.

Slovak Rep.
to improved water source
U.S. Virgin Islands Antigua and Barbuda
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary
≥ 50
and Nevis
Dominica Slovenia Romania 30–49
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and 10–29
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino

Kosovo 6–9
Montenegro
Grenada FYR ≤5
Italy Macedonia
Trinidad Vatican Albania
R.B. de Venezuela
and Tobago City Greece no data

MDG performance

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Monaco Tajikistan of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina MDG performance
New
Dominican Puerto British Virgin
Poland
MDG 7.C Halve by 2015 the proportion of Zealand
Germany

Republic Rico (US) Islands (UK)

people without sustainable access to safe
Ukraine

Anguilla (UK) Czech Rep.

U.S. Virgin Islands Antigua and Barbuda Slovak Rep. drinking water
(US) Austria
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Hungary
and Nevis Slovenia on target
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia close to target
(Neth) Bosnia and
Bonaire St. Vincent and
St. Lucia San Herz. Serbia
Aruba far from target
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino This map was produced by the Map Design Unit of The World Bank.
Montenegro Kosovo no data The boundaries, colors, denominations and any other information
Grenada FYR
Italy Macedonia shown on this map do not imply, on the part of The World Bank
Trinidad Vatican Albania Group, any judgment on the legal status of any territory, or any
and Tobago City Greece
R.B. de Venezuela endorsement or acceptance of such boundaries.

Source: World Bank staff calculations based on data from the World Development Indicators database.
138 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
calling for multilateral cooperation to pursue
a comprehensive and balanced trade agree-
ment. WTO Director-General Pascal Lamy
asked WTO ambassadors to engage in infor-
mal sessions with the goal of breaking long-
standing stalemates (including sessions on
the sidelines of the World Economic Forum
Davos meeting in January 2011). He called
the chairs of the negotiating committees for
revised texts by late-April 2011 and urged
WTO ambassadors to also pursue bilateral
and small-group discussions to resolve key
differences and catch up with work among
the full membership on refining texts. Nego-
tiations and consultations are scheduled to
commence on all Doha topics—agriculture,
nonagricultural market access, services, dis-
pute settlement, facilitation, trade and envi-
ronment, intellectual property rights, and the
development agenda.
Locking in the Doha Round is also cru-
cial so that the international community can
address emerging issues beyond those existing
in the Doha agenda.36 A fundamental shift is
taking place in the world economy, but the
multilateral trading system has not adapted.
Mattoo and Subramanian point out that
the world economy is moving broadly from
conditions of relative abundance to relative
scarcity, so economic security has become
a paramount concern for consumers, work-
ers, and ordinary citizens.37 Addressing these
new concerns—relating to food, energy, and
economic security—requires a wider agenda
of multilateral cooperation involving not just
the WTO but other multilateral institutions
as well. Although these issues are growing
in importance and require a multilateral
approach, abandoning the present Doha
negotiations in favor of an entirely new round
of talks with a more up-to-date agenda, as
some have advocated, has even less chance to
get anywhere than has the Doha effort.
Building capacity to support deeper but
open regional integration
Regional integration can complement multi-
lateral liberalization. Regional trade agree-
ments can mitigate potential adverse effects
GLOBAL MONITORING REPORT 2011
through parallel efforts to support unilateral
liberalization or open access. 38 Supporting
the regional integration efforts of low-income
countries through the promotion of trade
facilitation and regional infrastructure could
accelerate the pace of achievement for many
MDGs. But regional trade agreements could
be trade diverting and further complicate
developing countries’ global integration pros-
pects—for example, through complex rules of
origin. Developing countries should be strate-
gic about what is included in preferential trade
agreements, be selective about which trading
partners to include in such agreements and
treaties, and avoid signing on to one-size-fits-
all trade agreements that might not be suit-
able for their developmental stages.
In light of the growing number of prefer-
ential trade agreements, efforts should con-
centrate on building the capacity of trade
negotiators from developing countries. With
some 474 regional trade agreements notified
to the WTO as of July 2010, regional inte-
gration has become an unavoidable feature
of the international trading regime. More
of these agreements included “deep regional
integration” measures, involving regulatory
and policy issues such as investment, intellec-
tual property rights, environmental protec-
tion, technical and sanitary standards, migra-
tion and labor policies, and an array of other
behind-the-border regulations. The breadth
and coverage of deep regional integration is
new for many developing countries. Negoti-
ating and implementing such policies could
be complicated and, without proper guidance
and sufficient information, they could be tac-
tically and commercially destructive. Many
developing-country trade negotiators and
government agencies may not have the legal
or policy knowledge to strategically negoti-
ate the appropriate regulatory components of
regional agreements.
To provide more information about pref-
erential trade agreements to developing coun-
tries and the international community, the
World Bank recently launched a Web-based
portal, the Global Preferential Trade Agree-
ment Database, 39 which provides real-time
information on preferential trade agreements
GLOBAL MONITORING REPORT 2011
around the world (including agreements
that have not been notified to the WTO).
Designed to help trade policy makers, schol-
ars, and business operators better understand
and navigate the world of preferential trade
agreements, the database was merged with
the revamped Web-based World Integrated
Trade Solutions, multiagency software pro-
viding access to trade-related data and inte-
grated trade simulation tools.
A services “platform” could help fill in the
information gap for services negotiations.
Bringing together government agencies, reg-
ulators, and private sector stakeholders to
discuss regulatory reforms related to services
would improve policy makers’ expertise.40
Considering that services trade is paramount
to the export strategies for many LDCs and
that multilateral negotiations on further
services liberalization and issues of labor
mobility (beyond the General Agreement on
Trade and Services) are inevitably tied to the
eventual conclusion of the Doha Round, this
would provide important information that
developing countries need as they pursue
services trade liberalization through unilat-
eral reforms or regional and bilateral trade
agreements.
As developing countries pursue regional
integration, a better understanding of non-
tariff measures (NTMs)—their prevalence,
impact, and ways to streamline them—should
be at the forefront of governments’ export
competitiveness agenda. By definition, NTMs
encompass a broad range of barriers, includ-
ing quotas, import licensing systems and
procedures, sanitary regulations, technical
requirements, product standards, and label-
ing requirements. As a result of this broad
defi nition, there is a lot of discretion in the
application of NTMs, whether for legitimate
policy objectives (health and consumer pro-
tection) or as protectionist measures. Poorly
designed NTMs can also harm the competi-
tiveness of developing countries by constrain-
ing the ability of companies to outsource key
inputs, putting them at a competitive disad-
vantage on global markets. Enhancing trans-
parency on the adoption and application of
NTMs is thus crucial for developing countries
PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 139
as they aim to become more integrated with
the global economy.
As a follow-up to the Multi-Agency Sup-
port Team’s work on NTMs that revised the
NTM classification and collected data in
a pilot phase, the World Bank, the Interna-
tional Trade Centre, and the United Nations
Conference on Trade and Development have
initiated data collection and dissemination
efforts worldwide. As of December 2010,
data had been collected in about 30 countries
and should soon populate the World Inte-
grated Trade Solutions database.41 Data col-
lection and dissemination are accompanied
by capacity-building programs at country
and regional levels to improve the governance
of NTMs, streamline them, and assess their
impact on trade. More transparent informa-
tion on NTMs should lead to more informed
policy making for developing countries and
facilitate the harmonization and streamlining
of these measures.
To further increase the benefits of their
preferential trade programs, developed coun-
tries should also consider simplifying the
rules of origin pertaining to their preference
programs. The estimated administrative cost
for LDCs to comply with such rules is rela-
tively high—in the range of 3–4 percent of
the value of the goods traded. But because
the majority of most-favored-nation tariffs in
high-income countries are below this range,
many LDCs choose not to use the preference
margin. Harmonizing multilaterally would
bring the administrative costs down. Those
costs can also be reduced by adopting more
trader-friendly approaches, such as allow-
ing self-certification methods. The rules can
be further eased by allowing less restrictive
cumulation rules (such as diagonal or full
cumulation), allowing duty drawback, and
setting higher de minimis levels.42
Trade facilitation for LDCs, landlocked
countries, and lagging regions
Exporters in many developing countries con-
tinue to face weak transport infrastructure
and burdensome trade procedures. Land-
locked LDCs, in particular, face unique
140 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK GLOBAL MONITORING REPORT 2011

BOX 5.2 The donor community is enhancing Africa’s trade facilitation

The international community has reinforced its
support to LDCs, especially in Africa. In addition
to the Multi-Donor Trade Facility, the World Bank
multidonor Trade Facilitation Facility, launched in
July 2009, helps developing countries implement
trade facilitation reforms and scale up trade-related
infrastructure and institutions. As of June 2010, the
facility was supporting 29 projects, with $20 mil-
lion approved. Most projects are in Africa (Camer-
oon, Democratic Republic of Congo, Lesotho, Nige-
ria, Rwanda, South Africa, Togo, Zimbabwe, and
regional projects with the Economic Community of
West African States and the Economic Community
of Central African States). The facility also has pro-
vided funding for regional transportation integra-
tion in East Asia and the Pacifi c, Europe and Cen-
tral Asia, and Latin America. The aim is to provide
initial funding to support technical advisory services
and capacity building for project preparation that
would later lead to concrete and measurable trade
facilitation improvements. In addition, the facil-
ity supports the Doha negotiations by funding case
studies to assess the implementation challenges of
trade facilitation agreements for LDCs.

infrastructure and institutional hurdles to and better-connected leading areas. More-

overseas markets. For many landlocked
LDCs, connecting to global supply chains is a
formidable challenge caused by long distances
from seaports and the need to cross borders.
Landlocked countries tend to trade, on aver-
age, 30 percent less than coastal countries.
Connecting landlocked LDCs to global sup-
ply chains could expand their employment,
income, and consumption opportunities.
With 20 of 54 low-income countries land-
locked (mostly in Sub-Saharan Africa), trade
facilitation that connects landlocked regions
with international markets will open consid-
erable economic opportunities (box 5.2). It
could include streamlining transit regimes,
implementing border and customs reform,
improving transport service quality, and
coordinating multimodal nodes within the
supply chain. Limited competition on domes-
tic routes is an explanatory factor behind the
high prices charged for domestic shipments.43
So constraining monopoly power and remov-
ing barriers to entry and exit would lower
costs for importers and exporters.
Logistical improvements can connect
rural and remote areas within developing
countries.44 Even with the sharper focus on
connecting countries to trade corridors and
supply chains, there is still a gaping divide
between lagging areas in developing countries
over, logistics costs are exceptionally high
because of poor logistics services and infra-
structure, low economies of scale (transport-
ing small consignments across long distances),
and highly fragmented supply chains with
numerous intermediaries exacting time and
cost at each link. So producers and exporters
in lagging areas do not reap the full benefits
of trade. Policy actions should ensure better
coordination and cooperation among pro-
ducers within the supply chain and leverage
public-private partnerships to improve trans-
port infrastructure, to apply information
technology, and to reduce the information
asymmetry within supply chains (figure 5.7).
Trade facilitation through support to
trade finance in low-income countries
The international community should continue
to increase the availability of trade fi nance
in developing countries—particularly low-
income countries—to facilitate trade. Trade
fi nance, which includes a range of fi nancial
instruments for trade transactions, underpins
the financial infrastructure that enables coun-
tries and firms to trade with one another. The
lack of trade fi nance can have severe impli-
cations for a pro-development global trading
system. The issue of trade finance availability
GLOBAL MONITORING REPORT 2011 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 141

MAP 5.2 With half the people in developing regions without sanitation, the 2015 target appears to be
out of reach
IBRD 38469
APRIL 2011
Access to sanitation

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Monaco Tajikistan
of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola Malawi
Zambia Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina
Access to sanitation New
British Virgin
Dominican Puerto Poland Percent of population without access Zealand
Germany

Republic Rico (US) Islands (UK)

Ukraine

Anguilla (UK) Czech Rep.

Slovak Rep.
to sanitation facilities
U.S. Virgin Islands Antigua and Barbuda
(US)
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Austria
Hungary
≥ 50
and Nevis
Dominica Slovenia Romania 30–49
Curaçao Montserrat (UK) Martinique (Fr) Croatia
(Neth)
St. Lucia Bosnia and 10–29
Aruba Bonaire St. Vincent and San Herz. Serbia
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino 6–9

Montenegro Kosovo
Grenada FYR ≤5
Italy Macedonia
Trinidad Vatican Albania
R.B. de Venezuela
and Tobago City Greece no data

MDG performance

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium
Ukraine
Luxembourg Moldova Kazakhstan
Liechtenstein Romania Mongolia
Switzerland France Italy
Andorra Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Turkey Armenia baijan Turkmenistan Rep.
United States Portugal Spain Monaco Tajikistan of Korea Japan
Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Pakistan Bhutan
Bahrain Nepal
Former
Algeria Libya Arab Rep. Qatar
The Bahamas Spanish of Egypt Saudi
Cayman Is. (UK) Sahara Arabia United Arab Bangladesh
Cuba Turks and Caicos Islands (UK) India
Mexico Emirates Myanmar Lao
Haiti Mauritania Oman P.D.R.
Belize Jamaica Cape Verde Mali N. Mariana Islands (US)
Niger Rep. of Thailand Vietnam
Guatemala Honduras Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Faso Djibouti Cambodia Philippines Islands
Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Nigeria Central Ethiopia
Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola Malawi
Zambia Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New
Caledonia
Australia (Fr)
Swaziland
South Lesotho
Africa
Chile Uruguay
Argentina MDG performance
New
Dominican Puerto British Virgin
Poland
MDG 7.C Halve by 2015 the proportion of Zealand
Germany

Republic Rico (US) Islands (UK)

people without sustainable access to
Ukraine

Anguilla (UK) Czech Rep.

U.S. Virgin Islands Antigua and Barbuda Slovak Rep. basic sanitation
(US) Austria
St. Maarten (Neth) St. Kitts Guadeloupe (Fr) Hungary
and Nevis Slovenia on target
Dominica Romania
Curaçao Montserrat (UK) Martinique (Fr) Croatia close to target
(Neth) Bosnia and
Bonaire St. Vincent and
St. Lucia San Herz. Serbia
Aruba far from target
Bulgaria

(Neth) (Neth) The Grenadines Barbados Marino This map was produced by the Map Design Unit of The World Bank.
Montenegro Kosovo no data The boundaries, colors, denominations and any other information
Grenada FYR
Italy Macedonia shown on this map do not imply, on the part of The World Bank
Trinidad Vatican Albania Group, any judgment on the legal status of any territory, or any
and Tobago City Greece
R.B. de Venezuela endorsement or acceptance of such boundaries.

Source: World Bank staff calculations based on data from the World Development Indicators database.
142 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
FIGURE 5.7 Local-to-global connectivity
Subnational logistics
➤ consolidation
local
collection
district district ➤
hub hub
provincial ➤ shared storage
hub
International corridor logistics
national trucking checkpoints
hub rail
national transit
Source: Kunaka 2010.
became especially relevant during the global
financial crisis in 2008–09, when higher lend-
ing costs, higher risk premiums, and liquidity
pressures caused by scarcity of capital led to
a sudden shortage in trade finance.
Lack of affordable trade finance has prob-
ably constrained the trade activities of small
and medium enterprises (SMEs), particularly
in low-income countries. Results from finan-
cial market and firm surveys (undertaken
during the crisis by the IMF, the International
Chamber of Commerce, and the World Bank
to overcome the lack of data on trade finance)
and postcrisis empirical analyses all indicate
the prevalence of tighter trade finance condi-
tions during the crisis and significant adverse
effects on trade flows. The lack of data can
hamper clear conclusions. Although survey
results indicate that the shortfall in trade
finance has contributed to the sharp drop in
global trade flows during the crisis, it seems
that it played a moderate role in one study.45
In manufacturing, where volumes fell but
GLOBAL MONITORING REPORT 2011
Logistics activities
value addition
low-capacity vehicles
value addition
consolidation
shared storage
packaging
logistics exchanges
border trucking
transit checkpoints gateway
crossing rail
international transit
prices actually rose postcrisis, the evidence is
consistent with a negative supply shock that
might be associated with credit constraints.46
The trade collapse was mostly a result of the
spillover of the financial crisis to the real
economy and lower activity and inventory
destocking. Nevertheless, the lack of afford-
able trade fi nance likely constrained trading
activities of SMEs, especially those based in
low-income countries that have underdevel-
oped financial systems and banks that could
not fulfi ll the counterparty criteria of over-
seas banks. Postcrisis surveys and data on
trade finance indicate signs of improvement.
The institutional response in providing
trade finance during the crisis was timely
and substantial. In the midst of the crisis, the
international community responded swiftly—
spearheaded by the G-20—in committing
$250 billion over the course of two years
in funding for cofinancing arrangements
that support trade transactions. This was
implemented through a partnership between
GLOBAL MONITORING REPORT 2011
development banks, export credit agencies,
foreign commercial banks, private insurance
underwriters, and investment funds. Whereas
the G-20 support was mainly directed at large
banks and international banking institutions,
the World Bank’s International Finance Cor-
poration (IFC) and the regional development
banks stepped in as well to target their efforts
at smaller banks and banks in developing
countries. With the continued uncertainty in
trade fi nance markets, particularly for low-
income countries and small firms, govern-
ments and international organizations need
to be cautious of the timing and pace of with-
drawal of such trade finance programs.
Despite recent positive developments,
concerns about trade fi nance have not com-
pletely dissipated. At the Seoul G-20 meeting
in November 2010, the international com-
munity expressed particular concern about
low-income countries that may still be facing
severe difficulties in accessing trade fi nance
at affordable cost. These concerns are exac-
erbated by the lack of available data for trade
finance, which has constrained the ability to
properly monitor and evaluate existing trade
finance flows and to measure their impact
on trade flows during and after the crisis.
The building up of the Trade Registry by the
International Chamber of Commerce is a sig-
nificant step forward because it will create a
living database of the trade fi nance market
and may help demonstrate the resilience of
the trade finance business.
Other concerns relate to the new Basel
regulations, which are viewed as potentially
constraining the supply of trade finance.
Banks argue that the increase in the new
liquidity and capital prudential requirements,
and the nonrecognition of trade assets as a
highly liquid and safe asset, would lead to a
significant increase in banks’ cost in provid-
ing trade fi nance—a situation that will lead
to lower supply, higher prices, or both. Regu-
lators have insisted that the Basel II and III
increase in capital for trade finance exposures
is not any greater than for other exposures. In
light of these different views, the Basel Com-
mittee established a working group to study
the impact of regulations on trade finance. At
PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 143
the request of the World Bank and the WTO,
the G-20 will take stock of the situation at its
2011 meeting.
Renewed support for effective aid for
trade
The G-20 has renewed its commitment to sup-
port LDC trade capacity building through aid
for trade. At the November 2010 Seoul meet-
ing, the G-20 pledged to maintain aid for trade
commitments in 2011 and beyond, despite fis-
cal and budgetary constraints. Launched at the
G-8 meeting in Gleneagles and the follow-on
WTO Ministerial Conference in Hong Kong
SAR, China, in 2005, aid for trade aims to
facilitate the integration of developing coun-
tries (particularly the LDCs) into the global
economy by lowering cumbersome trade barri-
ers, reducing transaction costs, and enhancing
trade competitiveness. Aid for trade remains
an effective way to support LDCs to improve
supply-side capacities and reap the benefits of
increased market access.47
After a sharp increase in donor aid for
trade commitments in 2007 and 2008, the
latest OECD data indicate that new com-
mitments in 2009 plateaued at $39.5 billion
(2008 constant prices). In 2009, the World
Bank’s concessional arm, IDA, was the larg-
est provider of aid for trade, accounting for
about 21 percent of the total. Japan and
the United States were the largest bilateral
donors, providing 14 percent and 12 percent
of total aid for trade, respectively. Africa
was, for the fi rst time, the largest recipient
of aid for trade (41 percent); and the level
of commitments increased over those of
2008. Aid for trade in Africa was mainly
directed to Nigeria, Uganda, Kenya, and
Ethiopia. Asia was the second-largest recipi-
ent of aid for trade (39 percent), with Viet-
nam, India, and Afghanistan the major
recipients. Aid for trade mainly supported
projects involving trade infrastructure and
capacity building (particularly trade devel-
opment programs), while technical assis-
tance for institutional capacity building and
training for trade regulations have been on
the decline (figure 5.8).
144 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
FIGURE 5.8 Regional trends in aid for trade, 2002–09
20,000
16,000
US$ millions
12,000
8,000
4,000
0 0
2002 2003 2004 2005 2006 2007 2007 2009
(left axis) Africa Asia America
Middle East Europe Oceania
all developing countries (right axis)
Source: OECD, Aid for Trade Statistical Queries 2010, http://www.oecd.org/document/21/0,3746,en_
2649_34665_43230357_1_1_1_1,00.html.
Besides concerted efforts to channel aid
for trade to developing countries, the interna-
tional community is exploring the effective-
ness of aid for trade. At the initiative of the
WTO and the OECD, donors are currently
collecting case studies that illustrate the
impact of trade-related assistance and lending
programs and the lessons learned from these
projects. These case studies will be discussed
at the July 2011 WTO/OECD Aid for Trade
meeting. Moreover, with the emergence of a
multipolar world with rising economic pow-
ers and multinational private sector firms,
the quality of delivery of aid for trade has
become more critical. This new paradigm
calls for more public-private partnerships to
strengthen trade capacity-building assistance
delivered to LDCs. The IFIs can focus more
on leveraging partnerships between govern-
ment agencies and private sector firms. By
combining the policy experience of the gov-
ernment and the ingenuity of the private sec-
tor, trade development projects may have the
potential to be more far-reaching and effec-
tive. A good illustration of such programs is
the deployment of modern information and
communications technologies from the pri-
vate sector to streamline trade facilitation
and minimize at-the-border barriers.
GLOBAL MONITORING REPORT 2011
International financial
institutions’ support for
50,000 development
The IFIs are adapting their policies, proce-
40,000
dures, and tools to country heterogeneous
circumstances and needs.48 They strive to
US$ millions
30,000
provide all member-countries with devel-
opment solutions appropriate to meet their
20,000
development needs and capacity by using a
10,000
mix of lending policies, fi nancial facilities,
and knowledge services, and by supporting
the global public goods agenda. Moreover,
the financial crisis, and the food and fuels cri-
sis preceding it, have shown the crucial role
of IFIs in supporting responses to crises and
development emergencies, swiftly shifting
toward a more countercyclical approach to
mitigate social and economic impacts of the
crises.
The response to recent crises provided
a snapshot of the untapped potential of the
IFIs to address the challenges and opportuni-
ties of the postcrisis world. It also provided a
glimpse of how transformed IFIs will work
on an ongoing rather than emergency basis.
In recognition of the changing development
landscape and country development needs,
the IFIs have embarked on comprehensive
modernization agendas involving actions and
reforms to enhance financial capacity, trans-
form governance, reform organization, and
refresh and refi ne their priorities. Efforts to
bolster their performance, ensuring relevance
and results focus on country strategies and
operations in the postcrisis world (including
helping countries develop their own capacity
to manage for results) are key objectives of
the ongoing reform agendas and the driving
force in the development of the results-based
approaches that will guide IFIs’ actions in the
future.
The evolution of assistance policies and
resources
Given developing countries’ diverse needs and
heterogeneous characteristics, the approach of
the multilateral development banks (MDBs)
has increasingly been tailored to country con-
ditions and grounded in national strategies
GLOBAL MONITORING REPORT 2011 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
setting out countries’ development visions,
objectives, and priorities.49 All of the major
MDBs now formulate country strategy docu-
ments, generally, every two to four years,
with more frequent progress reports and inde-
pendent evaluations. At the World Bank, the
Country Assistance Strategy has evolved over
the past decade to adopt an explicit results
framework that specifies the expected links
between the World Bank’s interventions and
long-term development goals, along with
measurable indicators to monitor results.50
Donors have stepped up financial resources
to low-income countries through the MDBs’
affiliates that provide grants and no- (or
low-) interest credits. Disbursements by the
World Bank’s IDA, the African Development
Fund, the Asian Development Fund, the Inter-
American Development Bank (IADB)’s Fund
for Special Operations, and the European
Bank for Reconstruction and Development
(EBRD)’s Early Transition Countries Initia-
tive (under which the EBRD accepts higher
risks in projects in low-income members) have
steadily risen over the years. Strong pledges
from both traditional and new donors in the
last IDA replenishment recognize that restor-
ing momentum to the MDGs leading to 2015
requires ambitious efforts to deliver on the
economic growth and access agenda for basic
services (health, education, and basic infra-
structure). A total of 51 donors endorsed a
$49.3 billion funding package for the next
cycle of IDA (IDA16, which covers July 2011
to June 2014), an increase of 18 percent from
the previous round. At the African Develop-
ment Bank (AfDB), the level of concessional
aid resources was similarly maintained as
a reflection of donor commitment to the
achievement of MDGs by 2015. This com-
mitment was similarly demonstrated during
the 12th General Replenishment of the Afri-
can Development Fund, whereby negotiations
with 27 donor countries resulted in a 10.6 per-
cent increase from the previous replenishment
cycle and a funding package of approximately
$9.5 billion to support the fund’s work in low-
income countries in Africa between January
2011 and December 2013. MDBs’ operational
and financial approach to address specific
challenges or vulnerabilities has evolved and
145
expanded over the last decade. For instance,
the World Bank has enhanced its financial
support to provide increased access to highly
concessional resources for small IDA coun-
tries. Two measures were agreed to strengthen
IDA support for small states during the IDA16
period: fi rst, to eliminate the maximum per
capita allocation ceiling, currently set at spe-
cial drawing right (SDR) 19.8, which has con-
strained the allocations of several small states;
and, second, to raise the base allocation for
small states from SDR1.5 million to SDR3.0
million per year. This second measure would
result in a substantial increase of IDA resources
for small states with small populations.
IDA also has continued its efforts to help
countries recover from natural disasters.
Following the 2009 tsunami, IDA was able
to provide significant additional resources
to both Samoa and Tonga. Following the
earthquake in Haiti, the World Bank pledged
$479 million toward Haiti’s reconstruction
for the first 24 months after the earthquake,
two-thirds of which was delivered in the
fi rst 12 months. The portfolio in Haiti was
restructured toward meeting pressing post-
earthquake priorities; and, by end-2010, the
WBG had provided $340.0 million to Haiti,
including $139.5 in new grants, $129.0 mil-
lion in disbursements, debt cancellation of
$39.0 million (May 2010), and investments of
$32.5 million from the IFC (box 5.3). Simi-
larly, the IMF established a Post-Catastrophe
Debt Relief Trust that allows the fund to
join international debt relief efforts for very
poor countries hit by the most catastrophic of
natural disasters. Such debt relief is intended
to free up additional resources to meet excep-
tional balance-of-payments needs created by
the disaster and the recovery, complementing
fresh donor financing and the fund’s conces-
sional liquidity support. The Post-Catastrophe
Debt Relief Trust Fund provided timely assis-
tance to Haiti equivalent to around $268 mil-
lion in fund-financed debt stock relief, elimi-
nating Haiti’s entire outstanding debt to the
IMF. This decision adds to the $1.2 billion of
debt relief delivered to Haiti by the IMF and
other fi nancial organizations in June 2009,
under the Heavily Indebted Poor Countries
and Multilateral Debt Relief initiatives.
146 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
BOX 5.3 Special reconstruction allocation for Haiti
The earthquake that struck Haiti on January 12, 2010,
was a human tragedy. More than 230,000 people per-
ished, 300,000 more were wounded, and well more
than a million were displaced. The earthquake ravaged
cities including Port-au-Prince, the capital, destroying
whole neighborhoods, wiping away roads, collaps-
ing public buildings, and damaging businesses. The
disaster struck the country’s political, economic, and
administrative nerve center, where an estimated 65
percent of GDP and 85 percent of government revenues
were generated. A year later, conditions remain diffi-
cult for the Haitian population. About 1 million people
continue to live in tent camps and depend on aid orga-
nizations for water, food, sanitation, health, and edu-
cation services. Furthermore, on October 21, 2010, an
outbreak of cholera was confirmed. The latest United
Nations data indicate that about 149,000 cases have
been reported and more than 3,000 people have died.
International response. Innumerable public and
private organizations were mobilized in an unprec-
edented outpouring of international support after the
earthquake. At the International Conference on Haiti
in March 2010, $9 billion was pledged ($5.3 billion
of which was for 2010–11 to support the Government
Action Plan for Reconstruction and National Devel-
opment. At the end of 2010, the international com-
munity had delivered more than half of its pledge for
the fi rst 24 months: $1 billion in debt relief had been
provided and $2.7 billion approved for projects and
programs, with $1.2 billion of these funds spent.
Haiti Reconstruction Fund. At the request of the
government of Haiti, in April 2010, the World Bank
set up the Haiti Reconstruction Fund (HRF), a multi-
donor trust fund. The World Bank serves as a trustee
for the HRF. In March 2010, donors pledged more
than $500 million to the fund. To date, 12 donors have
confirmed their pledges for a total of $267 million, all
of which has been received. Since June 2010, the HRF
has allocated $193 million for reconstruction.
WBG support. The World Bank Group pledged
$479 million toward Haiti’s reconstruction for the
fi rst 24 months after the earthquake, two thirds of
which was delivered in the first 12 months. The port-
folio in Haiti was restructured toward meeting press-
ing post-earthquake priorities; and, by end-2010 the
WBG had provided $340.0 million to Haiti, includ-
ing $139.5 in new grants, $129.0 million in disburse-
ments, debt cancellation of $39.0 million (May 2010),
and investments of $32.5 million from the IFC.
GLOBAL MONITORING REPORT 2011
WBG disbursements and debt relief. The World
Bank portfolio currently includes 16 active projects
for a total of $337 million. The Bank has also pro-
vided $42.5 million in budget support to the govern-
ment of Haiti since January 2010. IDA, the Bank’s
fund for the poorest countries, has disbursed more
than $11 million a month, on average, since the earth-
quake. Following the earthquake, the Haiti portfolio
was restructured to direct resources toward urgent
post-earthquake priorities through the reallocation
of funds and the modification of activities to adapt
to institutional capacity changes. In May 2010, the
Bank was able to cancel Haiti’s remaining $39 million
debt to IDA, thanks to contributions by IDA.
New WBG programs. In early 2011, the WBG
will launch the following programs and projects from
newly approved resources: $95 million for a neighbor-
hood upgrading and housing reconstruction program
financed by IDA and the HRF; $15 million for an
emergency cholera project; $11 million for a line item
budget support operation to cover specific expendi-
tures in education and agriculture; and $3 million to
establish a $35 million Partial Risk Guarantee Fund
for private operators in Haiti, cofi nanced by the Inter-
American Development Bank (IADB), the U.S. Trea-
sury, and the HRF.
Support for the private sector. Since the earth-
quake, the WBG’s IFC has approved five projects
for a total of $49.6 million. Three of these projects
(worth $15.3 million) in the garments, hotels, energy,
and mining industries, are already under implementa-
tion, in addition to a trade finance guarantee facility,
an equity investment in a local bank to expand access
to fi nance to SMEs, and a 30-megawatt energy proj-
ect approved prior to the quake. IFC advisory services
also ramped up operations to foster a better invest-
ment climate, improve access to finance, and develop
management skills for more than 600 small entrepre-
neurs. The IFC’s combined investment and advisory
projects are supporting the creation of 5,000 new
jobs and safeguarding 5,000 existing jobs. The IFC
also completed the structuring of the international
bidding process for TELECO, which is bringing the
country’s largest foreign direct investment since the
earthquake—a $100 million investment by Vietnam’s
biggest mobile telephone operator, Viettel—to expand
telecommunications services in Haiti.
GLOBAL MONITORING REPORT 2011 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 147

The approach to address the specific chal-
lenges of fragile and confl ict-affected coun-
tries has also increasingly evolved over the
last decade. In terms of resources, eligible
postconflict and reengaging countries receive
exceptional allocations, and some have ben-
efited from exceptional pre-arrears clearance
grants and allocations to help clear arrears.
The IDA phase-out period for exceptional
allocations, for instance, was increased from
3 to 6 years, resulting in 10 years of support
for postconfl ict countries, which otherwise
would have exited the window during IDA15.
For the IDA16 period, postconflict countries
will also be eligible for an extension of their
phase-out period on a case-by-case basis, pro-
vided that they meet a predetermined set of
criteria. Fragile and confl ict-affected coun-
tries have also benefited significantly from
policies on debt relief (through the joint World
Bank-IMF Heavily Indebted Poor Countries
and Multilateral Debt Relief initiatives) and
from grants allocated through IDA’s grant
allocation framework to help them avoid the
reemergence of debt problems.
Although all fragile states are characterized
by weak policies and institutions, country
context varies considerably and operational
approaches must be carefully calibrated to
take this into account. The World Bank will
incorporate the lessons of the 2011 World
Development Report (box 5.4)—a report
focused on conflict, security, and devel-
opment challenges in fragile and conflict-
affected countries—into the revision of its pol-
icies. Moreover, the World Bank committed
in the IDA16 replenishment to develop plans
to enhance the implementation of United

BOX 5.4 World Development Report 2011: Conflict, Security,

y and Development

Repeated cycles of political and criminal violence
have left more than 440 million people in poverty.
Strengthening the institutions that provide justice,
jobs, and citizen security is crucial to break these
cycles. Restoring confidence and transforming secu-
rity, justice, and economic institutions is possible
within a generation. But that requires determined
national leadership and an international system
“refitted” to address 21st-century risks of violence:
refocusing assistance on preventing criminal and
political violence, reforming the procedures of
international agencies, and renewing cooperative
efforts between lower-, middle-, and higher-income
countries.
Why do some parts of the world face repeated
cycles of violence? Violence can be spurred by a
range of internal and external stresses—infi ltration
of trafficking networks and foreign fighting forces;
youth unemployment; economic shocks; and ten-
sions between ethnic, regional, or religious groups.
But other areas of the world, including some very
poor countries, have managed and contained similar
pressures. The common “missing factor” explaining
repeated cycles of violence is that state and societal
institutions are too weak to manage high internal and
external stresses. States or subnational governments
do not provide protection and access to justice. Mar-
kets do not provide legal employment opportunities.
And communities have lost the social cohesion to
contain conflict.
What works in breaking repeated cycles of vio-
lence? The key differences between situations of
violence and stable developing environments are the
need to restore confidence before undertaking wider
institutional reforms; the priority given to basic insti-
tutional functions of security, justice, and provision
of employment; and the role of regional and interna-
tional action to contain external stresses. Pragmatic,
responsive, and accountable leadership at national
and local levels also plays a crucial role.
What policy tools make a difference, and how can
they be adapted to country circumstances? The pro-
grams listed in the table on the next page have been
used successfully in different country circumstances.
Few countries have combined all of them, and most
have faced challenges at some point either on fast
confidence-building or on longer-term institutional
transformation. The toolbox presented here thus pro-
vides a mechanism to learn from both successes and
failures.

continued
148 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
BOX 5.4 World Development Report 2011: Conflict, Security,
(continued)
A policy toolbox
Tools
Restoring and building
confidence
Forming inclusive-enough
coalitions
Delivering early results
Transforming
institutions
Prioritizing and
sequencing institutional
reform to underpin
security, justice, and jobs
Taking pragmatic
approaches—first-best
in the political context,
second-best in technical
terms
Global and regional
approaches for external
stresses that national
actors can initiate
Source: World Bank 2011.
y and Development
Politics and justice
Political action to build national
and international stakeholder
support and manage expectations:
strategic communications,
appointments, decision-making
processes
Policy decisions and realistic
timelines to political reform,
decentralization, and transitional
justice where relevant
Extended reach and
responsiveness of local justice
services
All areas: transparency and willingness to consider independent monitoring by independent or
multisectoral government agencies to lock in the credibility of changes
Justice sector reform: focus on
basic functions and use of state-
community and state-traditional
systems for justice
Phased anticorruption measures to
first show that national resources
can be used for the public good;
then to combat grand corruption;
and then to roll back minor
corruption
Platforms to coordinate supply-
and demand-side responses
between producing and
consuming countries
Joint investigations and
prosecutions across jurisdictions
GLOBAL MONITORING REPORT 2011
Security Jobs and services
Military and police Multisectoral community
doctrine and planning programs, combining security
adapted to citizen operations with action on
security goals employment, local justice,
infrastructure, education, and
Designed to deliver community empowerment
benefits in ease of
production, trade, Regulatory simplification and
workplace attendance, recovery of basic infrastructure
access to services, and transit facilities to remove
human rights principles, bottlenecks to private sector job
and simple mechanisms creation
to redress citizen
complaints Humanitarian delivery to support
improvements in intercommunity
and state-community relations
Security sector reform: Employment policy: mix of long-
capacity increases linked term public programs at the
to repeated realistic community level, employability
performance outcomes; programs, value chain approaches,
vetting and civilian infrastructure, informal sector
oversight support, and labor migration
agreements
Traditional low-capital
systems for rural and Temporary options for second-
community policing best service delivery: high service
coverage, high unit cost, under
phase-out agreements; planned
transitions from international
humanitarian support
Supplementary capacity Pooled supplementary
and over-the-horizon administrative capacity
guarantees
Cross-border development
programming
GLOBAL MONITORING REPORT 2011
Nations–World Bank partnership agreements,
evaluate IDA’s work in fragile and confl ict-
affected countries during 2012–13, strengthen
collaboration with partners on multidonor
trust funds administered by the World Bank,
and revise the postconflict performance indi-
cators and publicly disclose them before the
start of IDA16.
Like IDA’s special assistance, the African
Development Fund’s postconflict enhance-
ment factor enables countries to benefit from
additional resources beyond their perfor-
mance-based allocation for a limited period
after they are designated postconfl ict coun-
tries. The AfDB has established the Post-
Conflict Country Facility to help countries
emerging from conflict clear these arrears on
their debt. Similarly, the ADB has deployed
innovative means to strengthen the effective-
ness of country-led models of engagement
in the complex environments of fragile and
conflict-affected situations. In particular,
ADB has sought to sustain its commitments
for longer periods; partner closely with other
funding agencies; and pursue deeper, more
flexible, and longer engagements in capac-
ity and institutional development. The IADB
used special measures for its engagement in
Haiti—including simplified startup require-
ments, broader eligible expenditure catego-
ries, and elimination of counterpart financing
requirements. In 2004, the EBRD launched
the Early Transition Countries Initiative to
increase its impact in the region’s lowest-
income and least-advanced transition coun-
tries51 by developing specific financial facili-
ties targeted at local enterprises, including the
separate facilities to fund equity investments,
directly finance long-term loans, cofinance
loans with local commercial banks, and lend
to microfinance institutions.
Development finance
Over the years, the MDBs have expanded the
range of their instruments and modernized
them to make them more responsive, results
oriented, and amenable to an enhanced busi-
ness model and country needs. For example,
PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 149
important refinements to the development
policy lending (DPL) instrument were made
at the World Bank immediately prior to
and during the crisis. First, the World Bank
adopted enhancements for DPL with a
deferred drawdown option (DDO) that allows
International Bank for Reconstruction and
Development (IBRD) borrowers to postpone
disbursement of a loan for a defi ned period,
instead of drawing down funds immediately
after approval. Second, the World Bank
introduced a DPL instrument that provides
liquidity immediately after a natural disas-
ter (the CAT DDO) to support a disaster risk
management program, assuming a state of
emergency is declared. And, third, the Bank
adopted reforms for the Special DPL, avail-
able to countries that are approaching or are
in a macroeconomic crisis, contingent on a
disbursing IMF program being in place. Since
April 2008, the board has approved 12 DPL
DDOs for a total of $5.6 billion, and $4.8
billion of that amount had been disbursed by
the middle of fiscal 2011. Several CAT DDOs
for countries vulnerable to natural catastro-
phes have since been approved, totaling $400
million. Moreover, in recognition of the vul-
nerabilities that low-income countries face
in terms of both financial crises and natural
disasters, the World Bank and the IDA depu-
ties have recently agreed to establish a dedi-
cated Crisis Response Window (CRW) within
IDA to enhance its capacity to respond to
crises. The CRW will provide IDA countries
with timely access to additional resources to
respond to the impact of severe economic cri-
ses or natural disasters; and it will strengthen
IDA’s capacity to respond rapidly to such
crises in collaboration with other agencies,
development banks, and donors. Resources
for the CRW have been capped at 5 percent
of total IDA16 resources, and an amount
of SDR1,335 million has been set aside to
finance expenditures under the CRW.
Finally, a major effort is also under way
to reform the World Bank’s investment lend-
ing model to focus on results and risks, with
the goal of improving its responsiveness to
borrowers’ needs and to a changing global
150 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
environment.52 Guarantees are currently one
of three development finance instruments
(along with DPLs and investment lending)
that the World Bank offers, and a number
of actions are being put in place to improve
the attractiveness of the guarantee prod-
uct and encourage country teams and client
governments to actively consider guarantee
operations.
Similarly, the ADB has introduced new and
innovative instruments to fi nance large indi-
vidual projects and longer-term investment
programs. The following instruments expand
the options available in ADB’s development
fi nance portfolio while preserving its credit
standing: Multitranche Financing Facility,
which allows the ADB to finance a long-term
investment program based on a sector assess-
ment (road map) and organized in a series
of funding blocks, or tranches; Nonsover-
eign Public Sector Financing Facility, which
provides debt finance (loans and guarantees)
directly to selected nonsovereign public sec-
tor entities without a central government
(sovereign) guarantee; Local Currency Loan
Product, which allows the ADB to offer loans
denominated in a local currency to reduce
the mismatch between income received in a
domestic currency and debt repayments in a
foreign currency; and new forms of cofinanc-
ing through active financial syndications and
risk sharing with commercial financing part-
ners that have since been mainstreamed into
the ADB’s operations.53
The global financial crisis undoubt-
edly also had a lasting effect on the AfDB’s
lending. In March 2009, the AfDB’s board
endorsed four initiatives aimed at better
responding to the needs of its client countries:
an Emergency Liquidity Facility to assist eli-
gible AfDB regional member-countries and
nonsovereign operations suffering from lack
of liquidity ($1.5 billion); a Trade Finance
Initiative ($1 billion) that comprises a line
of credit ($500 million) and a Global Trade
Liquidity Program ($500 million) to allow
eligible African commercial banks to sup-
port trade finance operations; an accelerated
replenishment process for the 12th General
Replenishment of the African Development
GLOBAL MONITORING REPORT 2011
Fund; and enhanced Policy Advisory Support
to support countries where advisory capacity
remains challenging.
The EBRD has also expanded the exist-
ing pool of financial instruments avail-
able to the private sector in its countries of
operation. This includes the introduction
of various facilities and frameworks aimed
at different aspects of private sector devel-
opment—regional energy efficiency, direct
mid-size lending, and regional micro, small,
and medium enterprises lending. The crisis
response packages introduced in 2008 are
good examples of the EBRD’s reaction to the
changing economic environment in its coun-
tries of operation. 54 Similarly, the IFC also
undertook new initiatives to support private
sector activities in the wake of the crisis by
providing liquidity support, rebuilding finan-
cial infrastructure and mobilizing investment
in distressed asset pools, and providing advi-
sory services to enhance the efficiency of dis-
tressed asset markets.55
Knowledge services
The IFIs are also increasingly providing more
flexible and ad hoc analysis, research, global
public goods in the form of databases and
free data, advice, and technical assistance.
In low-income countries and some lower-
middle-income countries, knowledge services
are often bundled with lending, which is seen
as a tool of public policy for designing and
implementing reform/knowledge agendas.
More sophisticated middle-income countries
are mainly interested in obtaining stand-alone
knowledge support in cutting-edge areas.
Between these two extremes, there is a vari-
ety of hybrid requests that are accommodated
by an increased flexibility in the delivery
modalities. For instance, the EBRD’s unique
mandate of fostering transition toward open
market–oriented economies has shaped its
specific role in knowledge services. Techni-
cal cooperation provided to clients (including
through donor programs) is aimed at differ-
ent “transition-oriented” aspects of an opera-
tion, such as development of management
skills, legal advice to promote regulatory
GLOBAL MONITORING REPORT 2011
development and improve legislation and
corporate governance, and skills transfer.
Another example of knowledge services is the
EBRD’s Turn Around Management and Busi-
ness Advisory Services programs, which have
been valuable instruments for the promotion
of good management in the SME sector, pro-
viding consultancy advice at the enterprise
level. Turn Around Management supports
the introduction of international best practice
SME enterprises, while the Business Advi-
sory Services Program acts as a facilitator
for the use of local, private sector consultants
by micro, small, and medium enterprises to
obtain a diverse array of services.
Increasingly, cutting-edge knowledge is
generated in the South through the countries’
own development experiences. And as policy
analysis and development research are increas-
ingly conducted by countries themselves, the
IFIs can play a vital role both as generators
of research and as providers of a forum for
bringing together knowledge from both the
North and the South—acting as a global con-
nector of practitioner knowledge, a broker
of development, and a facilitator of capacity
development and client learning. The World
Bank, for instance, has established partner-
ships with researchers and analysts in devel-
oping countries: the China Center for Eco-
nomic Research, the New Economic School
in Moscow, the Economic Research Forum in
Cairo, the Global Development Network in
collaboration with 11 regional partners and
headquartered in New Delhi, and others. A
South-South Experience Exchange Facility
has been set up to help developing countries
share expertise. 56 So far, that facility has
received 88 proposals to support South-South
activities in World Bank products and services
in more than 40 countries.
As MDBs strengthen their role as provid-
ers of global public goods (such as data and
research) and their role in linking country
practitioners and policy makers to sources and
centers of knowledge and innovation dispersed
around the world, knowledge platforms that
involve external stakeholders in coproduc-
ing knowledge have been set up to provide a
framework for sustained global collaboration
PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 151
around selected strategically significant
issues. For instance, the World Bank knowl-
edge platform initiative focuses resources—
both within the World Bank and across the
development community—on strategic, and
cross-sectoral transformational issues to fill
critical knowledge gaps and seek cogeneration
of knowledge from diverse sources and insti-
tutions. The first three knowledge platforms
are becoming operational, and they focus
on urbanization, the e-Transform Initiative
(information and communications technol-
ogy for accountability and development); and
green development. The World Bank also is
taking steps to improve access to its data and
research (box 5.5).
Global programs and partnerships
The MDBs are stepping up their efforts to
address common social sector and environ-
mental challenges through global programs
and partnerships. World Bank support for
global programs began three decades ago,
with the establishment of the Consultative
Group on International Agricultural Research
that was recently restructured. Global pro-
grams are now reflected in World Bank cor-
porate strategy papers and operational activi-
ties, with more than 100 programs (managed
by either the World Bank or external recipi-
ents). Recent initiatives include the World
Bank’s role in the Climate Investment Funds,
including the Clean Technology Fund and
Special Climate Change Fund, which pro-
vide financing for projects to address climate
change (box 5.6). The Pilot Program on Cli-
mate Resilience helps highly vulnerable coun-
tries integrate risk and resilience into core
development planning; the Forest Investment
Program supports efforts to reduce defores-
tation and forest degradation, cut emissions,
and maintain carbon reservoirs; and the Scal-
ing Up Renewable Energy Program aims to
demonstrate low-carbon energy development
in low-income countries.
The regional banks are also involved
in global and regional programs covering
fi nancial stability, trade, environment, post-
confl ict assistance, and knowledge; and all
152 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
BOX 5.5 Open data, open knowledge, and open solutions
User expectations for public information are chang-
ing rapidly; and clients and other stakeholders expect
easy access to World Bank–generated data, knowl-
edge, and solutions. Open access is meant to increase
the development impact of the World Bank’s informa-
tion. Three areas are receiving top priority:
• Open data—In April 2010, the World Bank
released its development data free of charge. The
Open Data work builds on the success of this initia-
tive. Its priorities are to expand the Web site and
create a data resource center to serve as a clearing-
house for researchers, to develop new applications
to enable easy access to data across platforms and
devices, and to strengthen capacity-building activi-
ties in developing countries to help ensure the qual-
ity of data.
• Open knowledge—With a shift in the focus of
research teams, there is now an emphasis on four
but the EBRD are involved in the control
of infectious diseases. In many cases, the
banks are focused on regional public goods
(RPGs) or on regional aspects of global pub-
lic goods, looking to the World Bank on
the global aspects. They also are involved
in helping their regional clients build coun-
try capacity to meet requirements under
global agreements. For the AfDB, critical
issues are postconflict assistance and health,
especially in the face of the HIV/AIDS epi-
demic. For the ADB, key issues are the
environment, health, and knowledge, with
a particular focus on those issues where
there are spillover effects within the region
or within the ADB’s subregional coverage.
For the EBRD, nuclear safety is an area of
special focus, where the World Bank has
the international lead in supporting transi-
tion countries in decommissioning capacity
and resolving other environmental liabilities
from the Soviet era. Another focus area is
fi nancial stability, especially the adoption of
the standards and codes underpinning mar-
ket economies. The IADB has five priority
GLOBAL MONITORING REPORT 2011
strategic themes: economic transformations around
emerging issues, such as macroeconomic growth,
agriculture, and rural development, urbanization,
and green development; the broadening of oppor-
tunities by trade and integration and access to
finance; the understanding of risk and vulnerability
across countries and sectors; and the measuring of
results and aid effectiveness.
• Open solutions—To engage in the “wholesaling of
research,” the World Bank plans a greater focus on
the creation of software tools, training products,
and researcher communities. Significant efforts are
under way to improve and to broaden the focus of
such existing tools as ADePT and iSimulate. The
programs are expected to be collaborative efforts
within the World Bank and with technology part-
ners (such as Google and Microsoft) and multilat-
eral organizations (such as the United Nations and
the IMF).
areas in the provision of regional and global
public goods—fi nancial sector assessments,
regional integration, curbing of infectious
diseases, promotion of environmental ser-
vices, and support for research in agriculture
and regional policy dialogue. It has prepared
a new policy framework for its support for
RPGs, including a fi nancing facility geared
to providing grant fi nancing for what it calls
“early-stage RPGs” (where dialogue among
countries is needed), “later-stage RPGs”
(where larger institutional resources to man-
age the emerging program are needed), and
the initial stages of “club RPGs” (which will
likely be fi nancially self-sustaining once they
are up and running).
The regional development banks are also
stepping up their efforts to promote regional
cooperation and integration. The AfDB sup-
ports the New Partnership for Africa’s Devel-
opment Secretariat, the African Union, the
Global Environment Facility (especially on
the development of the Environmental Action
Plan for Africa), and the Africa Regional
Coordination Unit for the United Nations
GLOBAL MONITORING REPORT 2011 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK 153

BOX 5.6 Climate change, natural disasters, and the World Bank Group

To address the threat of climate change, develop-
ment needs to become “climate smart.” It must deal
with adaptation efficiently and mitigate the growth
of greenhouse gases. This will require additional
resources, beyond existing development finance. Syn-
ergies between climate-related investment and devel-
opment need to be fully exploited. Adaptation pro-
grams can be pro-poor, such as converting degraded
cropland into resilient agroforestry systems.
The WBG is helping countries address climate
change through projects and partnerships. A key
partnership is the Climate Investment Funds (estab-
lished in 2008) to which contributing countries have
pledged more than $6 billion for climate-resilient and
low-emissions development. It is a partnership among
the MDBs through which developed and develop-
ing countries come together with stakeholders. The
World Bank plays a critical tripartite role—as trustee
of the funds, as implementing agency, and as host of
the administrative unit. More than 40 countries are
currently undertaking Climate Investment Funds pilot
programs. The Pilot Program on Climate Resilience
helps highly vulnerable countries integrate risk and
resilience into core development planning. The Forest
Investment Program supports efforts to reduce defor-
estation and forest degradation, cut emissions, and
maintain carbon reservoirs. Mitigation is addressed
through the Clean Technology Fund, which supports
scaled-up fi nancing for low-carbon technologies in
middle-income countries. The Scaling Up Renewable
Energy Program aims to demonstrate low-carbon
energy development in low-income countries.
The WBG also addresses climate change through
Development Policy Operations, technical assistance,
investment lending, and analytical work. Develop-
ment Policy Operations provide support to govern-
ments implementing climate-related policies. In
Ghana, for example, the Agriculture Development
Policy Credit supports efforts to integrate climate risk
management into agriculture-led growth. In Bangla-
desh, 320,000 homes have been provided with solar
electricity, and thus with lighting for education and
for women’s economic empowerment. The IFC is sup-
porting climate-related investments that help meet the
needs of the poor for modern services in an efficient
manner, such as the Lighting Africa Program.
Natural disasters are another area where the WBG
is increasingly focusing its attention. The Global Facil-
ity for Disaster Recovery and Reconstruction has
established a Disaster Risk Financing and Insurance
Program to enhance capacity building and knowledge
sharing on disaster risk financing and to mainstream
disaster risk financing and insurance into World
Bank operations. New regional initiatives can build
the Caribbean Catastrophe Risk Insurance Facility,
which is in its fourth year of providing hurricane and/
or earthquake insurance to 16 Caribbean countries
and territories. With reinsurance, it has the capacity to
handle claims arising from a series of events having a
statistical probability of occurring only once in 1,000
years without drawing more than $20 million of its
own assets (which now exceed $100 million). The
World Bank’s convening power is proving valuable
to other pooling initiatives designed to reduce costs
and achieve efficiencies in risk fi nancing. In partner-
ship with the ADB and regional partners, the Pacific
Catastrophe Risk Assessment and Financing Initiative
has been developing several disaster risk management
applications: disaster risk financing solutions, includ-
ing a regional insurance facility; disaster risk prepared-
ness through identification of critical infrastructure;
and disaster risk reduction through the identifica-
tion of high-risk areas. Other similar new programs
include the Catastrophe Risk Insurance Facility for
Southeastern Europe and the Africa Risk Capacity, an
effort to pool drought risk across the continent.

Convention to Combat Desertification. In programs cover the Pacific Islands, Central

Asia, the Greater Mekong Subregion Pro-
gram has long been a prominent area of ADB
support, promoting cross-country coopera-
tion in a number of sectors through invest-
ments in infrastructure, policy initiatives,
and institutional mechanisms. Other regional
Asian regional economic cooperation, South
Asian subregional economic cooperation, and
the Association of Southeast Asian Nations.
Similarly, the IADB works very closely with
regional associations in Central and South
America and the Caribbean.
154 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
IFIs’ response to crises
The IMF has taken the lead in responding to
crises by providing financial support to coun-
tries to permit orderly adjustment to payments
crises. With the onset of the global financial
crisis, the IMF moved quickly to establish new
instruments to better assist its members—for
example, a new Flexible Credit Line (FCL) to
provide large and up-front financing to mem-
bers with very strong fundamentals and poli-
cies. The facility can be used on a precaution-
ary basis or for actual balance-of-payments
needs. Because access to the FCL is restricted
to those countries that meet strict qualifica-
tion criteria, drawings under it are not tied
to ex post conditionality. Countries that do
not qualify for the FCL may receive financial
assistance under High Access Precaution-
ary Stand-by Arrangements, which can be
frontloaded and must take account of the
strength of a country’s policies and the exter-
nal environment. The Precautionary Credit
Line (PCL) was introduced to meet the needs
of countries that, despite having sound poli-
cies and fundamentals, have some remaining
vulnerabilities that preclude them from using
the FCL. Decisions have been made on a dou-
bling of access levels, and conditionality has
been reformed to make it more focused and
tailored to country circumstances.
IMF actions were complemented by the
MDBs. Much of the increase in MDB financ-
ing over the past two years took the form of
budget support to quickly disburse funds to
protect the most vulnerable people against
the fallout of the crisis, to maintain planned
infrastructure investment, and to sustain
private sector–led economic growth and
employment creation. The countercyclicality
of the fi nancial support provided during the
crisis by the IFIs was particularly important,
given that the overall aid levels stagnated in
real terms.
The IFIs’ response was tailored to the
gravity, speed, and center of attention of the
event. The IMF has made commitments of
more than $250 billion since mid-2008, and
the MDBs had record commitments and dis-
bursements in the same period. For instance,
GLOBAL MONITORING REPORT 2011
since July 2008 when the full force of the
financial crisis began to hit, the WBG has
committed more than $152 billion and dis-
bursed more than $96 billion in loans, grants,
equity investments, and guarantees in support
of its clients. In fiscal 2010, the IBRD’s com-
mitments of nonconcessional resources were
$44.2 billion, up from a record high of $33
billion in 2009. Low-income countries have
not had access to additional resources to the
same extent as middle-income countries. IDA
commitments in fiscal 2010 reached $14.5 bil-
lion, a 3.5 percent increase from 2009. Con-
cessional funds from MDBs increased only
slightly, given the fi xed envelope of conces-
sional windows. To accelerate their response
to the crisis, however, the IFIs have boosted
flows to the poorest countries by frontload-
ing available resources. Finally, the support
to private sector and nonsovereign has also
been substantial. IFC investments increased
by 21 percent in fiscal 2010, reaching $12.7
billion, with an additional $5.0 billion mobi-
lized from other sources. Almost half went to
IDA recipients—255 projects totaling $4.9
billion. Guarantees from the Multilateral
Investment Guarantee Agency reached $1.5
billion, up from $1.4 billion in 2009.
The role of the IFIs, of course, extends
beyond financing. Crucial roles for the IFIs in
the context of the global economic crisis have
been to inform policy making by analyzing
the international spillovers of national policy
actions and bringing out the interconnected
nature of the challenges and to highlight the
need to ensure that national responses are
consistent with the global good. Amid ris-
ing pressures for policies to turn inward, the
IFIs’ role in warning against the risks of trade
protectionism and fi nancial mercantilism is
indispensable. Drawing policy lessons from
the current crisis, especially but not only in
financial regulation, will be another key area.
The IMF has a particularly important role in
enhanced surveillance of risk in the global-
ized financial markets.
As the recovery progresses, it is clear
that the crisis has dramatically altered the
development challenges facing low-income
and middle-income countries, and hence
GLOBAL MONITORING REPORT 2011 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
those facing the international community.
Managing the availability and allocation of
resources will remain a challenge for the IFIs
as the recovery proceeds. To this end, the
IFIs’ shareholders increased the ability of the
IFIs to cope with crises and address devel-
opment needs through the increase in IMF
resources and recent agreements on MDBs’
capital increases.
Notes
1. OECD 2010.
2. Reinhart and Rogoff 2008.
3. Dang, Knack, and Rogers 2009. See also
Mold et al. (2010).
4. They look at banking crises in 24 donor coun-
tries over 1977–2007. The data and the defini-
tion of “banking crisis” are based on Laeven
and Valencia (2008).
5. Norway has spent 0.85 percent of its gross
national income on official development assis-
tance over the past half-century, followed by
the Netherlands (0.79 percent), Sweden (0.77
percent), Denmark (0.77 percent), and Lux-
embourg (0.57 percent).
6. Davies 2010.
7. Ibid.
8. IPRCC 2010. See also Qi (2007).
9. Kharas 2009.
10. Hudson Institute 2010.
11. Bishop and Green 2008.
12. World Bank 2010.
13. Easterly and Pfutze 2008.
14. Roodman 2009.
15. Knack, Rogers, and Eubank 2010.
16. Birdsall and Kharas 2010.
17. Publish What You Fund: The Global Cam-
paign for Aid Transparency, http://www.
publish whatyoufund.org/.
18. Statistical and technical problems include
endogeneity, difficulty in determining the
direction of causality or controlling for
country-specific characteristics, multicol-
linearity, autocorrelation, and selection of
instruments in the analysis (Roodman 2008).
19. Burnside and Dollar 2000.
20. Doucouliagos and Paldam 2005, 2006.
21. Clemens, Radelet, and Bhavnani 2004. Short-
impact aid is defi ned as an aid disbursement
funding an intervention that plausibly could
increase growth within four years (balance-
of-payments support, infrastructure finance).
22. Mavrotas 2005.
155
23. Developmental aid comprises multilateral aid
and aid from some bilateral donors, with rela-
tively high aid quality; geopolitical aid is aid
from other bilateral donors.
24. Reddy and Minoiu 2006.
25. Heyman 2010.
26. Michaelowa and Weber 2006.
27. Dreher, Nunnenkamp, and Thiele 2006.
28. Mishra and Newhouse 2007.
29. Bourguignon and Sundberg 2007.
30. See, for example, Shafik (2007).
31. Henn and McDonald 2010.
32. The Global Trade Alert database is available
at http://www.globaltradealert.com.
33. Chauffour 2008, Jeonghoi 2010, and Martin
and Anderson 2010.
34. Bouët et al. 2010.
35. Sutherland and Bhagwati 2011.
36. For examples, see Martin and Mattoo (2010)
and Hoekman, Martin, and Mattoo (2009).
37. Mattoo and Subramanian 2008.
38. This implies simultaneously cutting trade
barriers to external members or allowing
their participation within the rules envisaged
under the agreement.
39. The database is available at http://data.world
bank.org/news/global-preferential-trade-
agreement-database.
40. See Hoekman and Mattoo (2010).
41. The World Integrated Trade Solution data-
base is available at http://wits.worldbank.org/
wits/.
42. Notes on some technical terms are as fol-
lows: “Rules of origin” determine whether
an import shipment has “originated” in a
preference-eligible exporting country and thus
whether it qualifies for a reduced tariff rate.
The rules may be specified according to the
share of “value added” that originated in the
preference-eligible country, or in other ways.
“Cumulation” provisions allow intermediate
inputs that originate in certain third countries
(usually other preference-receiving countries)
to count toward fulfi lling the rule of origin,
thus providing flexibility in sourcing inputs
from low-cost providers. “De minimis” refers
to rules permitting exemption from notifica-
tion for state aid under certain thresholds to
farmers, fishermen, and processing and mar-
keting companies. See the WTO Web site
(http://www.wto.org) for more discussion of
various terms.
43. Raballand, Kunaka, and Giersing 2008.
44. See Arvis et al. 2010.
45. Chauffour and Malouche forthcoming.
156 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
46. Haddad, Harrison, and Hausman 2010.
47. See Hoekman and Wilson (2010) and OECD/
WTO (2010).
48. Our focus is on the five largest multilateral
development banks—the African Develop-
ment Bank (AfDB), the ADB, the European
Bank for Reconstruction and Development
(EBRD), the Inter-American Development
Bank (IADB), and the World Bank—and the
IMF.
49. For most low-income countries, the Poverty
Reduction Strategy Paper (PRSP) is the vehicle
used by the authorities to set out the national
strategy. It serves as the foundation for the
strategy. For middle-income countries, there
is not an agreed format like the PRSP for set-
ting out the national strategy, and the MDBs
rely on a wide variety of country-specific vehi-
cles as a basis for their country lending and
nonlending programs.
50. Every Country Assistance Strategy since Jan-
uary 2005 is results based (following a suc-
cessful pilot project during FY03/04).
51. The EBRD countries of operation within
the Early Transition Countries Initiative are
Armenia, Azerbaijan, Belarus, Georgia, Kyr-
gyz Republic, Moldova, Mongolia, Tajikistan,
Turkmenistan, and Uzbekistan.
52. World Bank 2009.
53. The ADB’s Trade Finance Program (TFP)
provides guarantees and loans to partner
banks in support of international trade. A
substantial portion of the TFP’s portfolio
supports small and medium-size enterprises,
and many transactions occur either intrare-
gionally or between developing member-
countries (DMCs). In March 2009, following
the financial crisis and market needs, the TFP
limit was increased to $1 billion and transac-
tion tenor was extended to three years. The
ADB established a $3 billion Countercycli-
cal Support Facility in June 2009 to provide
support to fiscal stimulus by middle-income
countries. The facility helped these middle-
income DMCs sustain critical development
expenditures for fiscal stimulus to counter
the adverse impacts of the global economic
crisis during 2009–10. The facility is a short-
term lending instrument and complements
conventional program loans aimed at sup-
porting structural reforms over an extended
period. Its aim is to provide fast-disbursing
crisis assistance to address short-term liquid-
GLOBAL MONITORING REPORT 2011
ity crunch and enhance DMCs’ capacity to
provide fiscal stimulus.
54. The EBRD has stepped up its support for
banks adversely affected by the crisis in the
transition region by providing equity and
debt finance that was otherwise unavail-
able on the fi nancial market. The enterprise
response package aims at meeting short-
term refi nancing needs and sustaining exist-
ing investment programs. The launch of
the Corporate Support Facility ensured the
provision of quick-disbursing financing to
help companies weather the impact of the
crisis and of opportunities to strengthen and
extend transition impact through loan con-
ditionality. The EBRD is virtually doubling
its Trade Facilitation Programme (to a maxi-
mum of €1.5 billion), which plays a crucial
role in keeping trade flowing to and from the
region in times of severely restricted access
to fi nance.
55. The IFC’s new initiatives focused on three
main areas: (1) providing liquidity support
through the expansion of the Global Trade
Finance Program from $1 billion to $3 billion
and creating the Global Trade Liquidity Pool,
which was endorsed at the most recent G-20
summit in London to provide credits to sup-
port trade fi nance over the next three years;
(2) launching the Infrastructure Crisis Facil-
ity to provide liquidity for infrastructure proj-
ects, creating the Microfinance Enhancement
Facility in partnership with the German devel-
opment bank, and rebuilding fi nancial infra-
structure by creating the Bank Capitaliza-
tion Fund in which the IFC and the Japanese
government have invested $1 and $2 billion,
respectively, to provide additional capital for
banks in developing countries; and (3) design-
ing advisory programs in risk management
and nonperforming-loans management and
implementing a Distressed Asset Recovery
Program that would mobilize investment into
distressed asset pools and provide advisory
services to enhance the efficiency of distressed
asset markets.
56. It is envisaged that the initiative could help
developing countries share expertise in areas
such as managing commodity windfalls,
developing efficient tax systems, adapting to
new technologies, selecting public investment
projects with high economic and social rates
of return, reforming pensions, and creating
social safety nets that benefit the poor.
GLOBAL MONITORING REPORT 2011 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
References
Arvis, J.-F., M. A. Mustra, L. Ojala, B. Shepherd,
and D. Saslavsky. 2010. “Connecting to Com-
pete 2010: Trade Logistics in the Global Econ-
omy. The Logistics Performance Index and Its
Indicators.” World Bank, Washington, DC.
Arvis, J.-F., G. Raballand, and J.-F. Marteau.
2010. The Cost of Being Landlocked: Logis-
tics Costs and Supply Chain Reliability. Direc-
tions in Development Series. Washington, DC:
World Bank.
Bishop, M., and M. Green. 2008. Philanthrocapi-
talism: How Giving Can Save the World. Lon-
don: Bloomsbury.
Birdsall, N., and H. Kharas. 2010. “Quality of
Official Development Assistance Assessment.”
Center for Global Development, Washington,
DC.
Bouët, A., D. Laborde Debucquet, E. Dienesch,
and K. Elliott. 2010. “The Costs and Benefits
of Duty-Free, Quota-Free Market Access for
Poor Countries: Who and What Matters?”
Working Paper 990, International Food Policy
Research Institute, Washington, DC.
Bourguignon, F., and M. Sundberg. 2007. “Aid
Effectiveness— Opening the Black Box.”
American Economic Review 97 (2): 316–21.
Burnside, C., and Dollar, D. 2000. “Aid, Policies,
and Growth.” American Economic Review 90
(4): 847–68.
Chauffour, J.-P. 2008. “Global Food Price Cri-
sis—Trade Policy Options.” PREM Notes 120
(June). World Bank, Washington, DC.
Chauffour, J.-P., and M. Malouche. Forthcoming.
Trade Finance during the Great Trade Col-
lapse. Washington, DC: World Bank.
Clemens, M., S. Radelet, and R. Bhavnani. 2004.
“Counting Chickens When They Hatch: The
Short-Term Effect of Aid on Growth.” Work-
ing Paper 44, Center for Global Development,
Washington, DC.
Dang, H.-A., S. Knack, and H. Rogers. 2009.
“International Aid and Financial Crises in
Donor Countries.” Policy Research Working
Paper 5162, World Bank, Washington, DC.
Davies, P. 2010. “A Review of the Roles and
Activities of New Development Partners.”
Concessional Finance and Global Partnerships
Working Paper Series No. 4, World Bank,
Washington, DC.
Doucouliagos, H., and M. Paldam. 2005. “The
Aid Effectiveness Literature: The Sad Result of
40 Years of Research.” Working Paper 2005-
15, University of Aarhus, Denmark.
157
——— . 2006. “Aid Effectiveness on Accumula-
tion: A Meta Study.” Kyklos 59 (2): 227–54.
Dreher, A., P. Nunnenkamp, and R. Thiele. 2006.
“Does Aid for Education Educate Children?
Evidence from Panel Data.” Working Paper,
Kiel Institute for the World Economy, Kiel,
Germany.
Easterly, W., and T. Pfutze. 2008. “Where Does
the Money Go? Best and Worst Practices in
Foreign Aid.” Working Paper 21, Brookings
Global Economy and Development, Washing-
ton, DC.
Haddad, M., A. Harrison, and C. Hausman.
2010. “Decomposing the Great Trade Col-
lapse: Products, Prices, and Quantities in the
2008–2009 Crisis.” Working Paper 16253,
National Bureau of Economic Research, Cam-
bridge, MA.
Henn, C., and B. McDonald. 2010. “Crisis Protec-
tionism: The Observed Trade Impact.” http://
www.voxeu.org/index.php?q=node/5960.
Heyman, A. 2010. “Drilling Down Aid: Aid by
Sector.” PhD diss., Bocconi University, Milan,
Italy.
Hoekman, B., and A. Mattoo. 2010. “Services
Trade Liberalization and Regulatory Reform:
Re-invigorating International Cooperation.”
Policy Research Working Paper 5517, World
Bank, Washington, DC.
Hoekman, B., W. Martin, and A. Mattoo. 2009.
“Conclude Doha: It Matters!” Policy Research
Working Paper 5135, World Bank, Washing-
ton, DC.
Hoekman, B., and J. Wilson. 2010. “Aid for
Trade: Building on Progress Today for Tomor-
row’s Future.” Policy Research Working Paper
5361, World Bank, Washington, DC.
Hudson Institute. 2010. The Index of Global Phi-
lanthropy and Remittances. Washington, DC.
IPRCC (International Poverty Reduction Center
in China). 2010. “Development Partnerships
for Growth and Poverty Reduction.” Working
Paper 07, Beijing.
Jeonghoi, K. 2010. “Recent Trends in Export
Restrictions.” Trade Policy Working Paper
101, Organisation for Economic Co-operation
and Development, Paris, France.
Kharas, H. 2009. “Development Assistance in
the 21st Century.” Paper prepared for the VIII
Salamanca Forum, “The Fight Against Hunger
and Poverty,” Salamanca, Spain, July 2–4.
Knack, S., F. H. Rogers, and N. Eubank. 2010.
“Aid Quality and Donor Rankings.” Policy
Research Working Paper 5290, World Bank,
Washington, DC.
158 PROGRESS IN THE DEVELOPMENT AND TRADING FRAMEWORK
Kunaka, C. 2010. Logistics in Lagging Regions:
Overcoming Local Barriers to Global Con-
nectivity. Washington, DC: World Bank.
Laeven, L., and F. Valencia. 2008. “Systemic
Banking Crises: A New Database.” Working
Paper 08/224, International Monetary Fund,
Washington, DC.
Martin, W., and K. Anderson. 2010. “Trade
Distortions and Food Price Surges.” Paper
prepared for the World Bank–University of
California-Berkeley Conference on Agricul-
ture for Development-Revisited, Berkeley, CA,
October 1–2.
Martin, W., and A. Mattoo. 2010. “The Doha
Development Agenda: What’s on the Table?”
Journal of International Trade and Economic
Development 19 (1): 81–107.
Mattoo, A., and Arvind Subramanian. 2008.
“Multilateralism Beyond Doha.” Policy
Research Working Paper 4735, World Bank,
Washington, DC.
Mavrotas, G. 2005. “Aid Heterogeneity: Looking
at Aid Effectiveness from a Different Angle.”
Journal of International Development 17 (8):
1019–36.
Michaelowa, K, and A. Weber. 2006. “Aid Effec-
tiveness Reconsidered: Panel Data Evidence for
the Education Sector.” Discussion Paper 264,
Hamburg Institute of International Econom-
ics. Hamburg, Germany.
Mishra, P., and D. Newhouse. 2007. “Health Aid
and Infant Mortality.” Working Paper 07/100,
International Monetary Fund, Washington,
DC.
Mold, A., A. Prizzon, E. Frot, and J. Santiso.
2010. “Aid Flows in Times of Crisis.” Presenta-
tion to the Conference on Development Coop-
eration In Times of Crisis and on Achieving the
MDGs, Madrid, Spain, June 9–10.
OECD (Organisation for Economic Co-operation
and Development). 2010. “Development Aid
Rose in 2009 and Most Donors Will Meet
2010 aid Targets.” Paris, France. http://www.
oecd.org/document/11/0,3343,en_2649_3444
7_44981579_1_.1_1_37413,00.html
OECD/WTO (Organisation for Economic Co-
operation and Development/ World Trade
Organization). 2010. “Aid for Trade: Is It
Working?” Policy Note. OECD, Paris, France.
GLOBAL MONITORING REPORT 2011
Qi, G. 2007. “China’s Foreign Aid: Policies,
Structure, Practice and Trend.” Presentation
at the Oxford/Cornell University Conference,
“New Directions in Development Assistance,”
Oxford, UK, June 11–12.
Raballand, G., C. Kunaka, and B. Giersing. 2008.
“The Impact of Regional Liberalization and
Harmonization in Road Transport Services: A
Focus on Zambia and Lessons for Landlocked
Countries.” Policy Research Working Paper
4482, World Bank, Washington, DC.
Reddy, S., and C. Minoiu. 2006. “Development
Aid and Economic Growth: A Positive Long-
Run Relation.” Department of Economic and
Social Affairs, United Nations, New York.
Reinhart, C. M., and K. Rogoff. 2008. “Bank-
ing Crises: An Equal Opportunity Menace.”
Working Paper 14587, National Bureau of Eco-
nomic Research, Cambridge, MA.
Roodman, D. 2008. “Through the Looking Glass,
and What OLS Found There: On Growth, For-
eign Aid, and Reverse Causality.” Working
Paper 137, Center for Global Development,
Washington, DC.
——— . 2009. “An Index of Donor Performance.”
Working Paper 67, Center for Global Develop-
ment, Washington, DC.
Shafik, N. 2010. “The Future of Aid.” Eighth
Luca d’Agliano Lecture in Development Eco-
nomics, Fondazione Luigi Einaudi, Turin, Italy,
December 17.
Sutherland, P., and J. Bhagwati. 2011. “The Doha
Round: Setting a Deadline, Defi ning a Final
Deal.” Interim report of the High Level Trade
Experts Group. http://www.acp-eu-trade.
org/library/fi les/High%20level%20trade%20
experts%20group_ EN _ 010111_The%20
doha%20round%20setting%20a%20dead-
line.pdf.
World Bank. 2009. “Moving Ahead on Invest-
ment Lending Reform: Risk Framework and
Implementation Support.” SecM2009-0442,
September 9, Washington, DC.
——— . 2010. “Research for Development—A
World Bank Perspective on Future Directions
for Research.” Policy Research Working Paper
5437, Washington, DC.
——— . 2011. World Development Report 2011:
Confl ict, Security, and Development. Wash-
ington, DC.

Technical Issues in Estimating
Progress in the Millennium
Development Goals
Measuring Millennium
Development Goals performance
T
he Millennium Development Goals
(MDGs) are typically defined in terms
of the number or percentage of people
(for example, halving the number of poor
people or achieving 100 percent access to pri-
mary education). Whereas data are generally
collected on a country basis, the influence of
each country in the global average depends
on the size of its population. When large
countries like China and India are doing
well—as on the poverty MDG—their prog-
ress will be reflected very visibly in the global
average, but will also hide progress (or a lack
of it) in smaller countries. To examine how
poor countries are doing, the data in chap-
ter 1 are also presented in terms of progress
in individual countries—not to replace the
standard approach, but to provide additional
information.
MDG performance is measured by devia-
tions from target values required to reach
development goals. The reference year for
measuring progress is officially set as 1990.
Countries are classified as
• on target: the country has already achieved
or will meet the 2015 development goal if
Appendix 1
progress continues until 2015 at the same
rate as progress from 1990 to the latest
available year;
• off target: the country will not achieve the
2015 development goal if progress contin-
ues until 2015 at the same rate as progress
from 1990 to the latest available year;
• close to the target or off target and above
average: the country is off target, but per-
forming better than the average off-target
country; or
• far from the target or off target and below
average: the country is off target and per-
forming worse than the average off-target
country.
To determine whether a country is on tar-
get, we calculate the linear annualized rate
of improvement from the 1990 value of each
MDG indicator needed to reach the 2015
goal. We restrict our attention to the six
MDGs and nine development targets with
quantifiable 2015 goals. A country is classi-
fied as on target if the observed MDG per-
formance is equal to or above this required
achievement path; a country is considered
off target if MDG progress is below this
path.
Within the off-target category, countries
are classified in relation to the group’s average
159
160 APPENDIX 1 GLOBAL MONITORING REPORT 2011

TABLE A1.1 Data availability by MDG, income, and geographic region, fiscal 2011
MDG 3.a MDG 3.a MDG 7.c
MDG 2.a gender gender MDG 4.a access
Total MDG 1.a primary parity in parity in child MDG 5.a to safe MDG 7.c
Income level and number of extreme MDG 1.c education primary secondary mortality maternal drinking access to
geographic region countries poverty hunger completion education education under five mortality water sanitation

Income
Low income 40 22 24 29 36 31 40 40 40 40
Lower-middle income 56 34 20 44 50 47 56 46 51 51
Upper-middle income 48 29 11 39 41 42 48 38 41 39

Region
East Asia and Pacific 24 8 3 15 19 17 24 15 21 21
Europe and Central
Asia 22 20 4 18 19 18 22 21 18 16
Latin America and
the Caribbean 30 20 12 26 26 26 30 24 29 29
Middle East and
North Africa 13 7 7 11 11 12 13 12 13 13
South Asia 8 5 4 6 8 8 8 8 7 7
Sub-Saharan Africa 47 25 25 36 44 39 47 44 44 44
Source: World Development Indicators.

distance to be on target. (The average here
is the mean of the off-target group, not the
entire sample of countries.) Two subgroups
are identified: countries that are off target
and above average or close to the target (that
is, countries for which development goals are
possibly within reach); and countries that
are off target and below average or far from
the target (that is, countries lagging the most
on reaching the 2015 MDGs). Performance
data for these two subgroups are presented in
tables A1.2, A1.3, and A1.4.
Data constraints
Detailed historical data on MDG performance
are required to calculate the achievement path
for each country to meet each of the MDGs.1

TABLE A1.2 MDG performance: share of countries close to the target in the total number of countries off target,
by geographic region
percent

MDG 7.c
MDG 2.a MDG 3.a MDG 3.a MDG 4.a access
MDG 1.a primary gender parity gender parity child MDG 5.a to safe MDG 7.c
extreme MDG 1.c education in primary in secondary mortality maternal drinking access to
Geographic region poverty hunger completion education education under five mortality water sanitation

East Asia and Pacific 100 100 100 75 100 33 64 56 62

Europe and Central Asia 0 — 100 100 100 92 40 50 27
Latin America and
25 100 100 91 100 85 43 60 39
the Caribbean
Middle East and
0 50 80 67 33 50 80 44 50
North Africa
South Asia 100 67 67 50 50 60 80 33 80
Sub-Saharan Africa 81 53 48 47 50 25 38 69 29
Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: — = not applicable. Shading indicates the share of countries close to target among all off-target countries that is below 50 percent.
GLOBAL MONITORING REPORT 2011 APPENDIX 1 161

TABLE A1.3 MDG performance: share of countries close to the target in the total number of countries
off target, by income level
percent

MDG 3.a MDG 3.a MDG 7.c

MDG 2.a gender gender MDG 4.a access
MDG 1.a primary parity in parity in child MDG 5.a to safe MDG 7.c
extreme MDG 1.c education primary secondary mortality maternal drinking access to
Income level poverty hunger completion education education under five mortality water sanitation

Low-income
88 50 41 36 35 34 51 67 31
countries
Lower-middle-
38 80 84 72 85 53 53 43 48
income countries
Upper-middle-
17 50 100 89 100 63 37 67 39
income countries
Source: World Bank staff calculations based on data from the World Development Indicators database.
Note: Shading indicates the share of countries close to target among all off-target countries that is below 50 percent.

TABLE A1.4 MDG performance: share of countries close to the target in the total number of countries off target,
by alternative typologies
percent

MDG 3.a MDG 3.a MDG 7.c

MDG 2.a gender gender MDG 4.a access
MDG 1.a primary parity in parity in child MDG 5.a to safe MDG 7.c
extreme MDG 1.c education primary secondary mortality maternal drinking access to
Alternative typology poverty hunger completion education education under five mortality water sanitation

A. IDA classification
Non-IDA countries 27 64 100 82 92 57 45 57 49
IDA countries 74 58 50 52 46 42 52 61 29

B. State fragility
Little to low 25 50 100 100 100 53 47 63 47
Moderate 33 100 100 83 100 65 32 50 45
Serious 73 50 56 83 50 65 87 73 50
High to extreme 70 67 27 23 38 26 33 64 23

C. Export sophistication
High 67 — 100 100 — 67 17 50 57
Medium high 43 60 67 100 33 59 68 50 65
Medium low 58 64 53 62 62 33 40 75 38
Low 60 50 69 67 70 52 63 58 25
Source: World Bank staff calculations based on data from the World Development Indicators database, Marshall and Cole 2010, and Lall 2000.
Note: — = not applicable; IDA = International Development Association. Shading indicates the share of countries close to target among all off-target countries that is
below 50 percent.

Unfortunately, such data are not available in
many countries for 1990, although estimates
for recent years tend to be more complete. If
no country data are available for 1990, we
used the closest available information in the
late 1980s or early 1990s as substitutes for
the starting point (table A1.5), and then cal-
culated the rate of progress required from
that point to meet the MDG. This approach
may be inaccurate if the data for the available
starting point are significantly different from
the level of MDG performance in 1990 or if
the sample period does not capture the latest
progress. The latter is a particularly impor-
tant issue now because data generally are not
available for 2009, the crisis year. In addi-
tion, for countries without at least two data
points, progress cannot be measured, even
if data are available for a recent year. Even
so, the approach enables us to include more
162 APPENDIX 1 GLOBAL MONITORING REPORT 2011

TABLE A1.5 Development indicators, average levels circa 1990

MDG 3.a MDG 3.a MDG 7.c
MDG 2.a gender gender MDG 4.a access
MDG 1.a primary parity in parity in child MDG 5.a to safe MDG 7.c
extreme MDG 1.c education primary secondary mortality maternal drinking access to
MDG performance  poverty hunger completion education education under five mortality water sanitation

On target 24.14 19.47 88.61 90.76 97.26 73.37 150.73 23.75 30.43
Close to the target 55.97 25.66 68.22 91.97 79.75 87.94 525.39 38.15 51.19
Far from the target 9.70 23.04 26.09 73.65 50.92 112.47 485.98 24.52 53.03
Total 29.43 22.27 68.99 89.14 87.00 93.44 419.49 28.26 46.42
Source: World Bank staff calculations based on data from the World Development Indicators database.

countries than if we relied only on data from
1990 and 2008. Table A1.1 summarizes the
number of observations by MDG, income
group of countries, and region (World Bank’s
classification, table A1.13).
The multinomial logit estimates
Empirically analyzing the MDGs from a
cross-country perspective imposes serious
challenges, with frequent data gaps and mea-
surement errors. Plausible functional forms
are therefore difficult to derive. And several
MDGs—such as access to safe drinking
water and health targets—are likely to be sig-
nificantly cross-correlated. Here we discuss
some of the most significant issues affecting
our methodological approach.2
We employ the multinomial logit estima-
tion method because it is well suited to exam-
ine the likelihood that countries fall into one
of the three country groups explained above
(on target, close to the target, and far from
the target), given changes in economic growth
and the policy framework. This method is
typically employed to model individual dis-
crete choices, such as the occupational choice
of households in microsimulations or demand
for modes of transportation.
Dependent variable and estimation
method. The multinomial logit model does
not use the actual values of MDG perfor-
mance indexes. Instead, MDG performance
is defined in terms of three values: 1 for
countries far from the target (off target and
below average), 2 for countries close to the
target (off target and above average), and 3
for countries on target. Avoiding the use of
the actual value of MDG indexes is impor-
tant for two reasons. First, the index num-
bers that indicate progress in many MDG
indicators display substantial variability for
countries performing well below or above
average. Taking account of this variability
would require some form of data trimming,
outlier identification procedure, or inclusion
of control variables that would reduce the
available degrees of freedom and therefore
decrease the reliability of estimates, in a con-
text of small data samples. Second and more
important, our goal is to assess the likelihood
of each country achieving or being on track
to achieve the MDGs, conditional on cur-
rent development performance, an empirical
approach consistent with the use of models
of categorical dependent variables. We are
not trying to determine how much per cap-
ita GDP must grow or institutions and poli-
cies must improve to attain the development
goals by 2015—for which observed values
of development indicators and linear regres-
sion models are better suited (although these
models, as well as nonlinear approaches, may
suffer from endogeneity and multicollinearity
problems).3
At first glance, an ordinal regression model
seems appropriate to analyze the extent to
which GDP growth and the policy frame-
work determine the likelihood of being on
track to achieve the MDGs. Our initial work
therefore involved estimating this relationship
using an ordered logistic regression model.
GLOBAL MONITORING REPORT 2011
However, a fundamental assumption of such
models is that the explanatory variables have
the same impact across different values for
the dependent variable (the proportional
odds hypothesis), and this assumption is con-
sistently rejected in most of the nine specifi-
cations under consideration. These rejections
imply that the coefficients associated with per
capita growth and institutions are not equal
across levels of MDG performance. For this
reason, alternative and less restrictive mod-
els that can integrate a differentiated impact
of growth and policy on the dependent vari-
able (MDG performance) are required. Con-
sequently, we turn to the multinomial logit
model, a nominal outcome estimation tech-
nique that reduces the risk of bias resulting
from the rejection of the proportional odds
hypothesis in the ordinal regression approach,
but at the cost of a potential loss of efficiency,
given the many parameters in the model.4
Functional form, model specification,
and the use of the Country Policy and Insti-
tutional Assessment index. The empiri-
cal model follows a simple structure that
addresses the fundamentals of the Global
Monitoring Report framework, 5 builds on
the current MDG literature, and takes into
account data limitations. Progress toward
the 2015 goals is expressed as a function of
initial conditions and development progress
over time (table A1.6). In this context, mea-
suring the quality of policies and institutions
represents a major challenge. We use the
Country Policy and Institutional Assessment
(CPIA) index, which provides a comprehen-
sive assessment of social policies and public
sector management that is fundamental for
MDG attainment. For example, the CPIA
index takes into consideration the extent to
which the pattern of public expenditures and
revenue collection affects the poor and is con-
sistent with national poverty reduction pri-
orities (criterion 8, equity of public resource
use). However, an important limitation of
the CPIA index is that values are not strictly
comparable across years because of numerous
methodological changes over time. Therefore,
we focus on current index values, assuming
APPENDIX 1 163
that the current level of the CPIA indexes
partially reflects past performances, given the
slowly evolving nature of institutions.
The independence of irrelevant alter-
natives. One assumption of our estima-
tion procedure is that the results satisfy the
independence of irrelevant alternatives (IIA)
assumption. This assumption, which is often
used in the context of public choice theory, is
that the odds of an outcome (in this exercise,
being on target, close to target, or far from
target) do not depend on other alternatives
that are available (alternatives are dissimilar).
This means that the coefficients on indepen-
dent variables (in this exercise, growth and
the quality of institutions) would not change
significantly if we were to suppress one of the
categories of the dependent variable and rees-
timate the model. We performed Small-Hsiao
tests6 to determine whether results satisfy the
IIA assumption, with generally satisfactory
results (calculations of the Small-Hsiao test
are shown in table A1.7).7 In any event, it is
generally acknowledged that IIA tests have lit-
tle power in small samples and may even pro-
vide conflicting results.8 According to McFad-
den, the multinomial logit model “should be
limited to situations where the alternatives
can plausibly be assumed to be distinct and
weighted independently in the eyes of each
decision-maker.”9 Therefore, the validity of
our conclusions (in terms of the IIA assump-
tion) relies more on the fact that our catego-
ries are conceptually independent than on this
econometric test.
Endogeneity, reverse causality. Indica-
tors of progress in human development (our
dependent variables) can have an impact on
growth and the quality of institutions (our
independent variables). Thus, our estimations
could be subject to reverse causality, which
would mean that the coefficients on the inde-
pendent variables are not correctly estimated.
However, such concerns are likely to be less
of a problem in our estimation than in regres-
sions using the levels of MDGs (for example,
where the level of the poverty head count
is the dependent variable). This is because
small changes in the dependent variable (for
 164
APPENDIX 1
TABLE A1.6 Growth has a clear, pervasive effect, but better policy also helps improve the odds of achieving the MDGs
multinomial logit estimates

(1) (2) (3) (4) (5) (6) (7) (8) (9)

  MDG 1.a MDG 1.c MDG 2.a MDG3.a (primary) MDG 3.a (secondary) MDG 4.a MDG 5.a MDG 7.a (water) MDG 7.a (sanitation)

Independent Above On Above On Above On Above On Above On Above On Above On Above On Above On
variables average target average target average target average target average target average target average target average target average target

  coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se coef/se
Annual
growth in
GDP per
capita, 0.262 0.359*** 0.335*** 0.427** 0.766*** 1.304*** 0.627 0.470 0.922* 1.411** 0.240* 0.518** 0.187* 0.546 0.105 0.253*** 0.260 0.383***
average for
1990–2009
(2005 Id PPP)
0.217 0.131 0.051 0.177 0.187 0.197 0.440 0.340 0.513 0.558 0.132 0.211 0.101 0.397 0.120 0.038 0.187 0.129
CPIA 2009 0.609 0.211 1.071*** 2.784*** – 0.158 0.128 0.725 0.925*** –1.007 –0.745 1.119** 1.670*** 0.864*** 1.382*** –2.033** –1.203 0.690 0.409
0.892 1.525 0.398 0.330 0.258 0.732 0.524 0.351 0.664 1.437 0.553 0.579 0.173 0.367 1.005 0.990 0.591 0.368
GDP per
capita 1990 –0.010 0.041* 0.001 0.002 0.079** 0.087** 0.008 0.005 0.146** 0.141** –0.005 –0.001 –0.025** 0.002 0.051*** 0.046*** –0.005 –0.012
(2005 Id PPP)
0.059 0.023 0.014 0.012 0.034 0.039 0.013 0.016 0.071 0.069 0.005 0.010 0.012 0.008 0.014 0.010 0.006 0.016
CPIA 1996 0.906 0.740 0.585 0.294 0.726 –0.511 –0.601* 0.363** 1.295* 2.209*** –0.801** 0.047 0.183 –0.360 1.652*** 1.927** 0.103 –0.355
1.020 1.404 0.741 0.341 0.549 0.958 0.321 0.153 0.673 0.629 0.400 0.412 0.126 0.231 0.582 0.760 0.278 0.457

GLOBAL MONITORING REPORT 2011

Extreme
poverty 0.097*** 0.079***
circa 1990
0.015 0.017
Hunger
–0.004 –0.040
circa 1990
0.036 0.049
Primary
education
0.167*** 0.221***
completion
circa 1990
0.027 0.029
Gender parity
in primary
0.062** 0.054*
education
circa 1990
0.026 0.031
 GLOBAL MONITORING REPORT 2011
Gender parity
in secondary
0.089*** 0.127***
education
circa 1990
0.007 0.014
Child
mortality
–0.006 –0.005
under five
circa 1990
0.005 0.006
Maternal
mortality –0.000 –0.004
circa 1990
0.001 0.003
Access to
safe drinking
0.077*** 0.041***
water
circa 1990
0.011 0.015
Access to
sanitation 0.003 –0.033
circa 1990
0.017 0.022
_cons –7.751** –5.864*** –5.259** –9.741*** –9.462*** –11.842*** –5.422*** –6.887*** –7.736*** –14.483*** –0.988 –7.021** –3.069*** –4.741** –1.408 –3.540* –3.612 0.266
3.479 0.897 2.281 2.609 2.271 3.435 1.896 2.277 1.148 3.278 2.204 2.794 0.507 2.101 2.251 2.085 2.263 2.259
Number of
77 49 90 105 95 114 104 106 107
observations,
adjusted R2 0.293 0.185 0.515 0.161 0.415 0.146 0.211 0.192 0.123

Source: World Bank staff calculations.

Note: Robust estimates with regional clusters. CPIA = Country Policy and Institutional Assessment; coef/se = coefficient/standard error; Id = international dollars; PPP = purchasing power parity.
*p < 0.1; **p < 0.05; ***p < 0.01.

APPENDIX 1
165
166 APPENDIX 1 GLOBAL MONITORING REPORT 2011

TABLE A1.7 Small-Hsiao tests of IIA assumption—null hypothesis: odds (outcome-j versus outcome-k) are
independent of other alternatives
Equation Omitted outcome Lnl(full) Lnl(omit) chi2 df P>chi2

Close to the target –9.65 –8.21 2.88 6.0 0.82

(1)
On target –2.20 0.00 4.40 6.0 0.62
Close to the target –0.01 0.00 0.03 6.0 1.00
(2)
On target –0.14 0.00 0.27 6.0 1.00
Close to the target –0.03 0.00 0.05 6.0 1.00
(3)
On target –8.05 –3.36 9.37 6.0 0.15
Close to the target –21.13 –11.46 19.33 6.0 0.00
(4)
On target –10.43 –5.90 9.07 6.0 0.17
Close to the target –0.01 0.00 0.02 6.0 1.00
(5)
On target –0.02 0.00 0.04 6.0 1.00
Close to the target –13.66 –12.33 2.65 6.0 0.85
(6)
On target –24.72 –22.87 3.69 6.0 0.72
Close to the target –14.32 –11.65 5.34 6.0 0.50
(7)
On target –22.85 –20.16 5.38 6.0 0.50
Close to the target –12.54 –9.20 6.67 6.0 0.35
(8)
On target –20.60 –11.08 19.06 6.0 0.00
Close to the target –24.05 –19.67 8.76 6.0 0.19
(9)
On target –19.08 –16.15 5.86 6.0 0.44
Source: World Bank staff calculations.
Note: IIA = independence of irrelevant alternatives.

example, poverty head count) in the latter
case may have a direct impact on the inde-
pendent variable (for example, growth). In
our estimations, the dependent variable is
inclusion in a group defined by deviations
from an exogenously determined path (for
example, the rate of change in poverty nec-
essary to achieve the goal). The connection
between inclusion in one of the three groups
and growth is much more tenuous.
Predicted probabilities, marginal effects,
and odds ratios. Table A1.8 summarizes the
effect of marginal changes in independent
variables on the probability of a country being
in one of our three groups at average sample
values. Results show that a one-unit marginal
increase in per capita GDP growth is signifi-
cantly and inversely related to the probabil-
ity of a country being far from the target in
all MDGs, excluding completion of primary
schooling and gender parity in secondary
education. Conversely, a one-unit increase in
GDP per capita growth significantly raises the
probability of a country being on target by at
least 0.05, holding other variables at their
mean, for primary completion, gender parity
in secondary education, and access to safe
water and sanitation. In addition, CPIA scores
appear to have significant marginal effects, at
average values, on the probabilities of being
on target (positive signs) and/or far from tar-
get (negative signs) for several health-related
MDGs (hunger, child mortality, and mater-
nal mortality). Note that for several devel-
opment goals, the predicted probability of a
country being close to target is significantly
and inversely related to changes in per capita
growth and the CPIA index (that is, higher
growth may reduce the probability of being
close to the target). This does not imply that
high growth is correlated with poor perfor-
mance. Rather, countries with relatively high
growth may be on track to meet the goals,
instead of off-track but close to the target.
The odds ratios or factor change coef-
ficients (table A1.9) illustrate the dynamics
among MDG performance outcomes. These
coefficients depict the expected change in the
probability of a country being on target ver-
sus far from the target and on target versus
close to the target, following a one-standard-
deviation increase in development drivers and
 GLOBAL MONITORING REPORT 2011
TABLE A1.8 Predicted probabilities and marginal effects
MDG 3.a MDG 3.a MDG 7.a MDG 7.a
  MDG 1.a     MDG 1.c     MDG 2.a     (primary)     (secondary)     MDG 4.a     MDG 5.a     (water)     (sanitation)  

Close Far Close Far Close Far Close Far Close Far Close Far Close Far Close Far Close Far
Predicted On to from On to from On to from On to from On to from On to from On to from On to from On to from
probabilities target target target   target target target   target target target   target target target   target target target   target target target   target target target   target target target   target target target

Predicted
0.69 0.19 0.13 0.43 0.40 0.17 0.42 0.58 0.00 0.75 0.22 0.03 0.73 0.27 0.00 0.20 0.44 0.36 0.10 0.44 0.47 0.57 0.27 0.15 0.23 0.31 0.46
probabilities

Change in
predicted
probabilities
following 0.04 –0.01 –0.04 0.05 0.01 –0.06   0.13 –0.13 0.00 –0.02 0.03 –0.01   0.10 –0.10 0.00 0.06 0.01 –0.08   0.04 0.02 –0.06   0.05 –0.02 –0.03   0.05 0.03 –0.08
a one-unit
increase in
GDP per
capita growth

Change in
predicted
probabilities
–0.03 0.07 –0.03 0.50 –0.22 –0.28 0.07 –0.07 0.00 0.05 –0.03 –0.02 0.05 –0.05 0.00 0.17 0.13 –0.30 0.09 0.15 –0.24 0.02 –0.22 0.16 0.02 0.12 –0.14
following
a one-unit
increase in
CPIA score
Source: World Bank staff calculations.
Note: CPIA = Country Policy and Institutional Assessment. Predicted probabilities and changes in predicted probabilities for each category are computed at average sample values. Results are not comparable across indica-
tors. Numbers in bold type denote significant changes at 0.10 level or better.

APPENDIX 1
167
168 APPENDIX 1 GLOBAL MONITORING REPORT 2011

TABLE A1.9 Effects of a one-standard-deviation increase in selected development drivers

percent

  Due to increase in GDP per capita growth   Due to increase in CPIA index

on target vs. on target vs. on target vs. on target vs.

MDG far from target close to target   far from target close to target

MDG 1.a extreme poverty 93 19 12 –19

MDG 1.c hunger 88 15 281 128
MDG 2.a primary completion rate 1,111 180 7 16
MDG 3.a gender parity (primary) 141 –25 67 12
MDG 3.a gender parity (secondary) 1,191 143 –34 16
MDG 4.a child mortality under five 163 68 152 36
MDG 5.a maternal mortality 189 101 120 34
MDG 7.c access to safe water 61 32 –48 58
MDG 7.c access to sanitation 102 25 26 –15
Source: World Bank staff calculations.
Note: Percentage variations are not comparable across indicators. Average standard deviation increase in GDP per capita growth = 1.8. Average
standard deviation increase in CPIA index = 0.5. Numbers in bold type denote significance at 0.10 level or better.

holding all other variables constant. (Results
are discussed in chapter 1.)
Disaggregation of the CPIA index. Our
main results use the aggregate CPIA index as
the independent variable. However, we also
did estimations using the four components of
the CPIA index in 2009 (economic manage-
ment, structural policies, policies for social
inclusion and equity, and public sector man-
agement and institutions) separately. These
results show that policies for social inclusion
and equity (gender equality, equity of pub-
lic resource use, building human resources,
social protection, and labor) are significantly
and positively correlated with the odds of a
country being on target to achieve the MDGs
for extreme poverty, primary completion,
gender parity, and child mortality. Results
are mixed for the three remaining indica-
tors (secondary education, access to water
and sanitation, and maternal mortality) and
vary according to whether a country is or is
not close to the target. However, these results
have to be interpreted with caution because
of the high collinearity between CPIA sub-
categories (pairwise correlations above 0.65)
and the limited degrees of freedom, given the
substantial number of parameters and the rel-
atively small size of available data samples.
Alternative measures of policy and insti-
tutions. Given the uncertainties surrounding
measurements of policy and institutional
performance, we test the robustness of our
results by including in the analysis other
indicators of government performance: state
fragility, as measured by Marshall and Cole’s
index10 and governance indicators produced
by Kaufmann, Kraay, and Mastruzzi.11 The
impact of these institutional variables, as
well as the CPIA index, on the odds of being
on target is summarized in tables A1.10 and
A1.11.
Table A1.10 shows the links between fra-
gility and governance variables and the odds
of a country being on target or far from the
target. Results are broadly consistent with our
previous estimates using the CPIA index: per-
ceptions of political stability and regulatory
quality are positively related to the likelihood
of achieving the hunger target; perceptions
of government effectiveness, regulatory qual-
ity, rule of law, and control of corruption are
positively related to achieving the targets for
gender equality and primary education; per-
ceptions of state fragility are inversely related
to child mortality; and perceptions of regu-
latory quality are positively correlated with
achieving the target for maternal mortality.
Table A1.11 displays the relationship
between institutional indicators and the prob-
ability of being on target versus close to the
target. Previous results are partly confirmed.
GLOBAL MONITORING REPORT 2011 APPENDIX 1 169

TABLE A1.10 Probability of being on target or far from the target average
MDG 3.a MDG 3.a MDG 7.c MDG 7.c
Indicator MDG 1.a MDG 1.c MDG 2.a (primary) (secondary) MDG 4.a MDG 5.a (water) (sanitation)

CPIA index (2009) + + + +

State fragility
(1995–2009) – – –
Voice and
accountability
Political stability + + –
Government
effectiveness + + + +
Regulatory quality + + + +
Rule of law + –
Control of
corruption – + +
Source: World Bank staff calculations.
Note: CPIA = Country Policy and Institutional Assessment. Significant at 0.1 level or better. Empty cells = no significant correlation. State fragility
(1995–2009) is the difference between index values in 2009 and 1996. Governance indicators correspond to 2009 rankings.

TABLE A1.11 Probability of being on target or close to the target average

MDG 3.a MDG 3.a MDG 7.c MDG 7.c
Indicator MDG 1.a MDG 1.c MDG 2.a (primary) (secondary) MDG 4.a MDG 5.a (water) (sanitation)

CPIA index (2009) + + +

State fragility
(1995–2009) –
Voice and
accountability –
Political stability + – – +
Government
effectiveness + – –
Regulatory quality + + –
Rule of law
Control of
corruption +
Source: World Bank staff calculations.
Note: CPIA = Country Policy and Institutional Assessment. Significant at 0.1 level or better. Empty cells = no significant correlation. State fragility
(1995–2009) is the difference between index values in 2009 and 1996. Governance indicators correspond to 2009 rankings.

Political stability and government effective-
ness are positively linked to the hunger target.
And political stability, regulatory quality, and
control of corruption exhibit positive correla-
tions with access to safe drinking water.
These estimations provide additional
and interesting links between indicators of
institutional quality and progress toward
the MDGs. For instance, political stability,
regulatory quality, and government effective-
ness are positively correlated with poverty
reduction for countries on target versus those
off target and below average (table A1.10);
however, per capita GDP growth loses its
significance in the case of political stability
and regulatory quality (results not shown).
Conversely, voice and accountability—that
is, civil and political rights—are not signifi-
cantly related to most MDGs (tables A1.10
and A1.11); and when a significant correla-
tion is found (table A1.11, extreme poverty),
the observed sign is negative (the result is
counterintuitive). In addition, a negative
relationship is found between some other
170 APPENDIX 1
governance variables (particularly, politi-
cal stability and government effectiveness)
and the attainment of several MDGs (child
and maternal mortality and access to water
and sanitation [tables A1.10 and A1.11]). A
complete analysis of the role of governance
in achieving the MDGs is beyond the scope
of this appendix. However, these apparently
counterintuitive outcomes are consistent with
the fact that many of the poorest countries are
making important progress toward achieving
the MDGs, thanks to sustained growth and
despite significant institutional weaknesses—
a finding that highlights the necessity of a
better understanding of the mechanisms
through which policies and institutions pro-
mote development.
Education outcomes versus outputs. Our
results show that policies and institutions are
significantly and positively correlated with
several health-related MDGs, whereas cor-
relations with education attainment are not
as strong. One possibility is that these dif-
ferences arise from the fact that the health
targets are defined in terms of outcomes
(for example, child and maternal mortal-
ity), whereas the education goals are defined
in terms of access (for example, primary
TABLE A1.12 Probability of being in percentile (66) or above or in
percentile (33) or below
Primary completion
rate, total Literacy rate, adult total
(% of relevant (% of people aged 15
Indicator age group) and above)
CPIA index (2009) + it is impossible to draw strong conclusions.
State fragility
(1995–2009)
Voice and accountability
Political stability +
Government effectiveness – our earlier results) is significantly related to
Regulatory quality – +
Rule of law + rate). Although these results are difficult to
Control of corruption + +
Source: World Bank staff calculations.
Note: CPIA = Country Policy and Institutional Assessment. Significant at 0.1 level or better.
Empty cells = no significant correlation. State fragility (1995–2009) is the difference between
index values in 2009 and 1996. Governance indicators correspond to 2009 rankings.
GLOBAL MONITORING REPORT 2011
education coverage). In part, the selection
of MDG indicators reflected the availabil-
ity of data. In what follows, we try to assess
how important institutions are to achieving
higher levels of literacy—a broadly avail-
able outcome-based measure of educational
attainment.
An explicit target for literacy was not
included in the MDGs, so defining outcomes
in terms of our three categories (on track, off
track but above average, and off track and
below average) would be difficult. Instead,
we calculate the growth rate of the literacy
rate between 1990 and 2009 (or the closest
available year) and divide the countries into
three categories:
• countries below percentile (33), thus exhib-
iting the slowest progress;
• countries above percentile (33) and below
percentile (66), thus close to the median;
and
• countries above percentile (66), the best
performers.
To provide a rough comparison with
access-based indicators, we perform a similar
procedure on the primary completion rate.
Several multinomial logit models, reproduc-
ing our core specification, are then estimated
linking education outcomes and access to
various proxies of institutional quality, using
as the reference category the group of coun-
tries below percentile (33).
The results are mixed and, to some
extent, counterintuitive (see table A1.12) so
However, it is interesting that the CPIA is not
significantly related to the outcome indica-
tor (literacy) but in this specification (unlike
the access indicator (primary completion
interpret, it does not appear that the dif-
fering results for the impact of growth and
institutions on progress toward achieving the
health and education MDGs can be ascribed
simply to the use of outcome versus access
indicators.
GLOBAL MONITORING REPORT 2011 APPENDIX 1 171

FIGURE A1.1 Odds of achieving the MDGs improve with growth and better policy

a. Annual per capita GDP growth and predicted probabilities

MDG 1.a extreme poverty –0.28

0.29
MDG 1.c hunger –0.73
0.54
MDG 2.a primary completion rate –0.33
0.48
MDG 3.a gender parity (primary education) –0.58
0.38
MDG 3.a gender parity (secondary education) –0.46
0.65
MDG 4.a child mortality under five –0.77
0.76
MDG 5.a maternal mortality –0.82
0.53
MDG 7.c access to safe water –0.27
0.61
MDG 7.c access to sanitation –0.86
0.51
–1.00 –0.80 –0.60 –0.40 –0.20 0.00 0.20 0.40 0.60 0.80 1.00

pairwise correlations between predicted probabilities and annual per capita GDP growth, average 1990–2009

far from target on target

b. CPIA index (2009) and predicted probabilities

MDG 1.a extreme poverty –0.20

0.55
MDG 1.c hunger –0.93
0.88
MDG 2.a primary completion rate –0.38
0.41
MDG 3.a gender parity (primary education) –0.60
0.73
MDG 3.a gender parity (secondary education) –0.44
0.62
MDG 4.a child mortality under five –0.78
0.80
MDG 5.a maternal mortality –0.78
0.64
MDG 7.c access to safe water –0.19
0.71
MDG 7.c access to sanitation –0.66
0.32
–1.00 –0.80 –0.60 –0.40 –0.20 0.00 0.20 0.40 0.60 0.80 1.00

pairwise correlations between predicted probabilities and CPIA index, 2009

far from target on target

Source: World Bank staff calculations.

Note: CPIA = Country Policy and Institutional Assessment. Pairwise correlations are significant at the 0.10 level or better.
172 APPENDIX 1 GLOBAL MONITORING REPORT 2011

TABLE A1.13 Classification of economies by region and income, fiscal 2011

East Asia and Pacific Latin America and the Caribbean Sub-Saharan Africa High-income OECD economies

American Samoa UMC Antigua and Barbuda UMC Angola LMC Australia
Cambodia LIC Argentina UMC Benin LIC Austria
China LMC Belize LMC Botswana UMC Belgium
Fiji UMC Bolivia LMC Burkina Faso LIC Canada
Indonesia LMC Brazil UMC Burundi LIC Czech Republic
Kiribati LMC Chile UMC Cameroon LMC Denmark
Korea, Dem. Rep. LIC Colombia UMC Cape Verde LMC Estonia
Lao PDR LIC Costa Rica UMC Central African Republic LIC Finland
Malaysia UMC Cuba UMC Chad LIC France
Marshall Islands LMC Dominica UMC Comoros LIC Germany
Micronesia, Fed. Sts. LMC Dominican Republic UMC Congo, Dem. Rep. LIC Greece
Mongolia LMC Ecuador LMC Congo, Rep. LMC Hungary
Myanmar LIC El Salvador LMC Côte d'Ivoire LMC Iceland
Palau UMC Grenada UMC Eritrea LIC Ireland
Papua New Guinea LMC Guatemala LMC Ethiopia LIC Israel
Philippines LMC Guyana LMC Gabon UMC Italy
Samoa LMC Haiti LIC Gambia, The LIC Japan
Solomon Islands LIC Honduras LMC Ghana LIC Korea, Rep.
Thailand LMC Jamaica UMC Guinea LIC Luxembourg
Timor-Leste LMC Mexico UMC Guinea-Bissau LIC Netherlands
Tonga LMC Nicaragua LMC Kenya LIC New Zealand
Tuvalu LMC Panama UMC Lesotho LMC Norway
Vanuatu LMC Paraguay LMC Liberia LIC Poland
Vietnam LMC Peru UMC Madagascar LIC Portugal
St. Kitts and Nevis UMC Malawi LIC Slovak Republic
Europe and Central Asia St. Lucia UMC Mali LIC Slovenia
St. Vincent and Mauritania LIC Spain
Albania UMC the Grenadines UMC Mauritius UMC Sweden
Armenia LMC Suriname UMC Mayotte UMC Switzerland
Azerbaijan UMC Uruguay UMC Mozambique LIC United Kingdom
Belarus UMC Venezuela, R.B. de UMC Namibia UMC United States
Bosnia and Herzegovina UMC Niger LIC
Bulgaria UMC Middle East and North Africa Nigeria LMC Other high-income economies
Georgia LMC Rwanda LIC
Kazakhstan UMC Algeria UMC São Tomé and Principe LMC Andorra
Kosovo LMC Djibouti LMC Senegal LMC Aruba
Kyrgyz Republic LIC Egypt, Arab Rep. LMC Seychelles UMC Bahamas, The
Lithuania UMC Iran, Islamic Rep. UMC Sierra Leone LIC Bahrain
Macedonia, FYR UMC Iraq LMC Somalia LIC Barbados
Moldova LMC Jordan LMC South Africa UMC Bermuda
Montenegro UMC Lebanon UMC Sudan LMC Brunei Darussalam
Romania UMC Libya UMC Swaziland LMC Cayman Islands
Russian Federation UMC Morocco LMC Tanzania LIC Channel Islands
Serbia UMC Syrian Arab Republic LMC Togo LIC Croatia
Tajikistan LIC Tunisia LMC Uganda LIC Cyprus
Turkey UMC West Bank and Gaza LMC Zambia LIC Equatorial Guinea
Turkmenistan LMC Yemen, Rep. LMC Zimbabwe LIC Faeroe Islands
Ukraine LMC French Polynesia
Uzbekistan LMC South Asia Gibraltar
Greenland
Afghanistan LIC Guam
Bangladesh LIC Hong Kong SAR, China
Bhutan LMC Isle of Man
India LMC Kuwait
Maldives LMC Latvia
Nepal LIC Liechtenstein
Pakistan LMC Macao SAR, China
Sri Lanka LMC Malta
Monaco
Netherlands Antilles
New Caledonia
Northern Mariana Islands
Oman
Puerto Rico
Qatar
San Marino
Saudi Arabia
Singapore
Trinidad and Tobago
Turks and Caicos Islands
United Arab Emirates
Virgin Islands (U.S.)

Source: World Bank data.

Note: OECD = Organisation for Economic Co-operation and Development. This table classifies all World Bank member-economies and all other economies with popula-
tions of more than 30,000. Economies are divided among income groups according to 2009 gross national income per capita, calculated using the World Bank Atlas
method. The groups are low income (LIC), $995 or less; lower-middle income (LMC), $996–$3,945; upper-middle income (UMC), $3,946–$12,195; and high income,
$12,196 or more.
GLOBAL MONITORING REPORT 2011
Notes
1. Statistical analysis is based on available data
as of January 2011. The maps in the report
were created with updated data, as of end-
March 2011.
2. Go and Quijada forthcoming.
3. Lofgren and Rodarte forthcoming.
4. Long and Freese 2006. An alternative to the
multinomial logit model would be the general-
ized ordered logit model, specifically propor-
tional and partial proportional odds models.
5. World Bank 2004.
6. Small and Hsiao 1985.
7. The null hypothesis is rejected in only two
cases, when testing the independence of out-
come 2 (off target and above average) in equa-
tion 4 (primary education) and outcome 3 (on
target) in equation 8 (access to clean water).
Our test results do not reject the assump-
tion of independence in the seven remaining
specifications.
8. Long and Freese 2006.
9. McFadden 1973, p. 113.
10. Marshall and Cole 2010.
11. Kaufmann, Kraay, and Mastruzzi 2010.
References
Go, D., and A. Quijada. Forthcoming. “Assess-
ing the Odds of Achieving the MDGs.” Back-
ground paper for Global Monitoring Report
2011, World Bank, Washington, DC.
APPENDIX 1 173
Kaufmann D, A. Kraay, and M. Mastruzzi. 2010.
“The Worldwide Governance Indicators:
Methodology and Analytical Issues.” Policy
Research Working Paper 5430, World Bank,
Washington, DC.
Lall, S. 2000. “The Technological Structure and
Performance of Developing Country Manufac-
tured Exports, 1985–1998.” Working Paper
44, Queen Elizabeth House, University of
Oxford, Oxford, UK.
Lofgren, H., and I. Rodarte. Forthcoming. “Macro
Analysis of Health and Education MDGs: Brief
Review and Country–Level Diagnosis.” Back-
ground note for Global Monitoring Report
2011, World Bank, Washington, DC.
Long, J. S., and J. Freese. 2006. Regression Mod-
els for Categorical Dependent Variables Using
Stata. 2nd edition. College Station, TX: Stata
Press.
Marshall, M., and B. Cole. 2010. “Global Report
2009: Conflict, Governance, and State Fragil-
ity.” Center for Global Policy, Washington,
DC.
McFadden, D. 1973. “Conditional Logit Analysis
of Qualitative Choice Behavior.” In Frontiers
of Econometrics, ed. P. Zarembka, 105–42.
New York: Academic Press.
Small, K., and C. Hsiao. 1985. “Multinomial
Logit Specification Tests.” International Eco-
nomic Review 26 (3): 619–27.
World Bank. 2004. Global Monitoring Report:
Policies and Actions for Achieving the Millen-
nium Development Goals and Related Out-
comes. Washington, DC.

Policies to Reduce Biodiversity
Loss and Enhance Human
Development Require a
Concerted Approach
B
oth poverty and economic development
affect global biodiversity and the pro-
vision of ecosystem goods and services.
More food, water, and fi rewood are needed
to sustain population growth, especially in
the poorer parts of the world. At the same
time, expected rising levels of affluence in
emerging economies will add to the demand
for products like meat, construction tim-
ber, and paper. When current technologies
and consumption patterns prevail, increased
global consumption by a larger and richer
population will drive:
• expansion of agriculture, forestry, and bio-
energy production;
• intensification of production, leading to
overexploitation and pollution from excess
nutrients and contaminants; and
• higher exploitation of remaining natural
ecosystems.
In the context of rising demand for food,
water, and firewood, growing populations
that lack the capabilities to minimize environ-
mental impacts of production will be more
susceptible to overexploiting and degrading
their livelihoods. As a consequence of land
Appendix 2
use expansion and more intense use, global
biodiversity loss will continue unabated or
accelerate without additional policies.1 Larg-
est losses are expected in Central and South
America, South Asia, and Sub-Saharan
Africa (map A2.1).
The importance of biodiversity for devel-
opment is recognized by Millennium Devel-
opment Goal 7, which includes targets to
“reverse the loss of environmental resources”
and “reduce biodiversity loss.” However,
there is scant quantitative evidence on ways
in which especially poorer people depend on
biodiversity, although patterns can be distin-
guished. In general, it seems that poor people
depend more on renewable natural resources
than on biodiversity. However, the value of
biodiversity aspects in terms of risk insurance,
ecosystem resilience, and larger area ecosys-
tem services (such as temperature regulation)
still represents a large knowledge gap.2
Traditionally, policies to reduce biodiver-
sity loss focus on area protection measures.
However, these measures have no effect on
the unprotected surrounding areas. Further-
more, expanding protected areas and reduc-
ing deforestation would impose limits on
175
176 APPENDIX 2 GLOBAL MONITORING REPORT 2011

MAP A2.1 Average change in species populations, relative to the intact situation (mean species abundance
or MSA), 2000 and 2050
IBRD 38470
APRIL 2011
2000

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium Czech Rep.
Luxembourg Slovak Rep. Ukraine Kazakhstan
Austria Hungary Moldova Mongolia
Liechtenstein France Slovenia Romania
Switzerland CroatiaB&HSerbia
Andorra Montenegro Kos. Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Rep.
United States Portugal Spain Monaco Albania FYRM Turkey Armenia baijan Turkmenistan
Tajikistan
of Korea Japan
Italy Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Bahrain Pakistan Nepal
Bhutan
Former
Algeria Libya Arab Rep. Qatar
The Bahamas St. Kitts and Nevis Spanish of Egypt Saudi
Cayman Is. (UK) Dominican Antigua and Barbuda Sahara Arabia United Arab Bangladesh
Mexico Cuba Rep. Dominica Emirates India Myanmar Lao
Haiti St. Lucia Mauritania Oman P.D.R.
Belize Jamaica St. Vincent and the Grenadines Cape Verde Mali Niger Rep. of Thailand Vietnam
N. Mariana Islands (US)
Guatemala Honduras Barbados Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Grenada Faso Djibouti Cambodia Philippines Islands
Trinidad and Tobago Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Ghana Nigeria Ethiopia Sri Micronesia
R.B. de Guyana Sierra Leone Côte Central Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New

Swaziland
MSA (%) Australia
Caledonia
(Fr)
100
South Lesotho
Africa 90
Uruguay
Chile
Argentina 80
70 New
Zealand
60
50
40
30
20
10
0
not included

2050

Greenland
(Den)

Faeroe Norway
Iceland Islands Finland
(Den) Sweden
The Netherlands Russian Federation
Estonia
Canada Isle of Man (UK) Denmark Russian Latvia
United Fed. Lithuania
Ireland Kingdom Germany Poland Belarus
Channel Islands (UK) Belgium Czech Rep.
Luxembourg Slovak Rep. Ukraine Kazakhstan
Austria Hungary Moldova Mongolia
Liechtenstein France Slovenia Romania
Switzerland CroatiaB&HSerbia
Andorra Montenegro Kos. Bulgaria Georgia Azer- Uzbekistan Kyrgyz D.P.R.
Rep.
United States Portugal Spain Monaco Albania FYRM Turkey Armenia baijan Turkmenistan
Tajikistan
of Korea Japan
Italy Greece Syrian
Gibraltar (UK) Cyprus Rep. of
Tunisia Malta Lebanon Arab Islamic Rep. Afghanistan China Korea
Israel Rep. Iraq of Iran
Bermuda Morocco Kuwait
(UK) West Bank and Gaza Jordan Pakistan Bhutan
Bahrain Nepal
Former
Algeria Libya Arab Rep. Qatar
The Bahamas St. Kitts and Nevis Spanish of Egypt Saudi
Cayman Is. (UK) Dominican Antigua and Barbuda Sahara Arabia United Arab Bangladesh
Mexico Cuba Rep. Dominica Emirates India Myanmar Lao
Haiti St. Lucia Mauritania Oman P.D.R.
Belize Jamaica St. Vincent and the Grenadines Cape Verde Mali Niger Rep. of Thailand Vietnam
N. Mariana Islands (US)
Guatemala Honduras Barbados Senegal Chad Eritrea Yemen Guam (US)
El Salvador Nicaragua The Gambia Burkina Sudan Marshall
Grenada Faso Djibouti Cambodia Philippines Islands
Trinidad and Tobago Guinea-Bissau Guinea Benin Federated States of
Costa Rica Panama Nigeria Ethiopia Sri Micronesia
R.B. de Guyana Sierra Leone Côte Ghana Central Lanka
Venezuela Suriname Liberia D’Ivoire African Rep. Brunei
Cameroon Somalia Palau
Colombia French Guiana (Fr) Togo Malaysia
Equatorial Guinea Uganda Maldives
Ecuador São Tomé and Príncipe Gabon Congo Rwanda
Kenya Singapore Nauru
Dem. Rep. of Burundi Seychelles
Papua Solomon
Congo Indonesia New Guinea Islands
Tanzania Comoros
Peru Brazil Timor-Leste
Angola
Zambia Malawi Mayotte
(Fr) Vanuatu
Bolivia
Zimbabwe Mauritius
Namibia Madagascar
Paraguay Botswana Mozambique Réunion (Fr) New

Swaziland
MSA (%) Australia
Caledonia
(Fr)
100
South Lesotho
Africa 90
Uruguay
Chile
Argentina 80
70 New
Zealand
60
50
40
30
20
10 This map was produced by the Map Design Unit of The World Bank.
0 The boundaries, colors, denominations and any other information
not included shown on this map do not imply, on the part of The World Bank
Group, any judgment on the legal status of any territory, or any
endorsement or acceptance of such boundaries.

Source: PBL 2010, http://www.pbl.nl/en/publications/2010/Rethinking_Global_Biodiversity_Strategies.

GLOBAL MONITORING REPORT 2011
agricultural land expansion, pushing land
and food prices upward. This would espe-
cially affect urban people who depend on the
market for their food. Therefore, additional
measures should include smarter and better-
managed land use, alternative consumption
patterns, and the development and applica-
tion of technologies to increase production
efficiency per hectare. Measured by food
prices, these routes would provide relief for
urban poor, increasing food security and
affordability. However, rural poor people are
oftentimes particularly vulnerable to changes
in land values and uses. Potential increases
in natural rents could affect rural poor for
whom land entitlements are not adequately
arranged, making them vulnerable for dis-
placement by larger landholders with access
to technology and markets.
In conclusion, policies to reduce biodiver-
sity loss and enhance human development
require a concerted approach. Some of these
options are already being discussed at the
international level; others appear to be more
contentious (changing consumption pat-
terns), requiring careful consideration at the
national level, and will be dependent on vol-
untary approaches. This requires broadening
the scope of biodiversity policies on all levels
of decision making. Although most manage-
ment decisions affecting biodiversity and eco-
system goods and services are made at a local
level, these local decisions are conditioned by
national and international policies beyond
APPENDIX 2 177
nature conservation. International policy
domains, including agricultural and for-
estry sector policies, development assistance
(including the role of international fi nancial
institutions) and international trade provide
clear opportunities to integrate biodiversity
and ecosystem goods and services in their
policies in ways that can support poverty
reduction as well as sustainable use and con-
servation of natural resources.3
Notes
1. PBL 2010.
2. CBD 2010.
3. Kok et al. 2010.
References
CBD (Convention on Biological Diversity). 2010.
“Linking Biodiversity Conservation and
Poverty Alleviation: A State of Knowledge
Review.” Technical Series No. 55, Montreal,
Canada.
Kok, M. T. J., S. Tyler, A. G. Prins, L. Pintér,
H. Baumüller, J. Bernstein, E. Tsioumani,
H. David Venema, and R. Grosshans. 2010.
“Prospects for Mainstreaming Ecosystem
Goods and Services in International Policies.”
Biodiversity 1 (1–2): 45–51.
PBL (Netherlands Environmental Assessment
Agency). 2010. Rethinking Global Biodiver-
sity Strategies: Exploring Structural Changes
in Production and Consumption to Reduce
Biodiversity Loss. Bilthoven, Netherlands.
 ECO-AUDIT
Environmental Benefits Statement
The World Bank is committed to pre- Saved:
serving endangered forests and natural • 32 trees
resources. The Office of the Publisher has • 10 million BTU of
chosen to print Global Monitoring Report total energy
2011: Improving the Odds of Achieving • 3,075 pounds of CO2
the MDGs on recycled paper with 30 per- equivalent of
cent post-consumer waste, in accordance greenhouse gases
with the recommended standards for paper • 14,809 gallons of
usage set by the Green Press Initiative, a wastewater
nonprofit program supporting publishers • 899 pounds of
in using fiber that is not sourced from solid waste
endangered forests. For more information,
visit www.greenpressinitiative.org.
 ow many countries are on track to achieve the Millennium
H Development Goals (MDGs) by 2015? How many countries
are off target, and how far are they from the goals? And what
factors are essential for improving the odds that off-target
countries can reach the goals? This year’s Global Monitoring
Report 2011: Improving the Odds of Achieving the MDGs
examines these questions. It takes a closer look at the diversity of
country progress, presents the challenges that remain, and
assesses the role of growth, policy reforms, trade, and donor
policies in meeting the MDGs.
Two-thirds of developing countries are on target or close to
being on target for all the MDGs. Among developing countries
that are falling short, half are close to getting on track. For those
countries that are on track, or close to it, solid economic growth
and good policies and institutions have been the key factors in
their success. With improved policies and faster growth, many
countries that are close to becoming on track could still achieve
the targets in 2015 or soon after.
Yet challenges abound. Even the middle-income countries
on track to achieve the MDGs are home to indigenous and
socially excluded groups that are still very poor and often well
behind in reaching the goals. Moreover, progress could stall
without stronger global growth, expanded access to export
markets for developing countries, and adequate assistance
from donors.
This year’s report also presents findings and lessons from
impact evaluations in health and education to better
understand results on the ground. Such evaluations often
show that the quantity of services devoted to health and
education has increased—but not the quality. This may be one
reason that progress toward those MDGs measured by
outcomes (as in health) is slower than it is for those MDGs
measured by access (as in education). Enhancing the efficiency,
incentives, and accountability in service delivery is essential to
improving outcomes.
Global Monitoring Report 2011 is prepared jointly by the
World Bank and the International Monetary Fund. It reviews
progress toward the MDGs and sets out priorities for policy
responses, both for developing countries and for the
international community.
ISBN 978-0-8213-8700-9
SKU 18700